Suppose the domestic market demand function in a certain market where Q is measured in thousands of units is Qd = 20 - 2.5P, and the domestic market supply function is Qs = 2.5P - 7.5. Suppose further that the world price for the good in question is $3.40 per unit. If the government places a $1.20 tariff on imported units of this good, how much revenue does the tariff generate?
A. $3,200
B. $3,600
C. $5,400
D. $3,000
C. $5,400
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Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $7, there is an
A) excess supply of 8 t-shirts. B) excess supply of 10 t-shirts. C) excess demand of 8 t-shirts. D) excess demand of 10 t-shirts.
The ________ real GDP, the ________
A) larger; larger the demand for money B) larger; smaller the demand for money C) larger; larger the supply of money D) smaller; larger the demand for money E) larger; smaller the supply of money
Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples
Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he
will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What should he do? A) He should sell the machine now to make the most profit. B) It does not matter what he does; he is going to take a loss on his project. C) He should rewire the machine, complete the task and then sell the machine. D) He should have never purchased the machine because he has already spent too much time on it and has not been paid for that time.