A tax is imposed on a certain good. The tax produces revenue of $5,000 for the government. The tax reduces consumer surplus by $3,000 and it reduces producer surplus by $4,000 . What is the amount of the deadweight loss of the tax?
The deadweight loss amounts to $3,000 + $4,000 - $5,000 = $2,000.
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In the figure above, if income were distributed equally across all households, the richest 20 percent of households would receive ________ of total income
A) 45 percent B) 25 percent C) 20 percent D) 15 percent
Keeping in mind the Coase theorem, in the figure above, if the residents of the town own the lake, the market does what?
A) overproduces 120 tons of pesticide B) underproduces 120 tons of pesticide C) overproduces 60 tons of pesticide D) produces the efficient quantity of pesticide
Price elasticities of supply are always:
a. the same as price elasticities of demand. b. negative numbers. c. positive numbers. d. greater than one. e. increased when a tax is imposed.
If there is a recession, the Fed would most likely
a. increase bank reserves by raising the discount rate. b. increase bank reserves by buying government securities. c. decrease bank reserves by raising the discount rate. d. decrease bank reserves by selling government securities. e. decrease bank reserves by lowering the legal reserve requirement.