To raise the most tax revenue, governments should tax which of the following goods?
A. SUVs
B. gasoline
C. designer shoes
D. sofas
Answer: B
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Anyone can purchase sulfur dioxide emission allowances on the Chicago Mercantile Exchange. Several environmental groups have raised money to buy allowances (which they subsequently destroy)
As part of their fund-raising, these groups have urged contributors to buy the allowances as gifts. As one newspaper story put it, "For the environmentalist in your life, here's a gift that is sold by the ton, fits in an envelope and will last forever." Source for quote: Randall Edwards, "Dear Santa: Please Bring Me Sulfur Dioxide for Christmas," Columbus Dispatch, December 19, 1999. What would be the impact on the price of the emission allowances in the market if more people buy sulfur emission allowances and destroy them? A) The price falls to zero. B) The price rises. C) The price falls but not to zero. D) The price remains unchanged because the allowances purchased by the environmental groups are destroyed.
A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:
a. upward sloping. b. above the minimum level of average variable cost. c. above average fixed cost. d. both a and b.
The price of a tomato increases and people buy more lettuce. You infer that lettuce and tomatoes are ________
A) complements B) normal goods C) substitutes D) inferior goods
Suppose the market demand function in a certain market where Q is measured in thousands of units is Qd = 20 - 2.5P, and the market supply function is Qs = 2.5P - 7.5. How much deadweight loss would there be in this market if the quantity bought and sold was 5,000 units?
A. $0.63 B. $62.50 C. $625 D. $6,250