If the government wanted a tax to reduce the quantity exchanged a large amount but not raise much in tax revenue, it would want to tax an industry with
a. elastic supply and demand curves.
b. inelastic supply and demand curves.
c. inelastic supply and elastic demand.
d. elastic supply and inelastic demand.
a
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Refer to A Negative Externality Problem. Absent any intervention, the competitive market will produce
Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation. a. 40 units. b. 45 units. c. 55 units. d. 60 units
Inflation that is caused by an increase in aggregate demand without any change in aggregate supply is called
A) demand-push inflation. B) cost-pull inflation. C) cost-push inflation. D) demand-pull inflation.
An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?
A) The price level will rise, and the level of GDP will fall. B) The price level will rise, and the level of GDP will be unaffected. C) The price level will fall, and the level of GDP will fall. D) The price level will fall, and the level of GDP will rise.
If workers and firms can fully anticipate the price change in the economy from a particular policy
A) then the policy will not impact employment levels. B) then the policy will not cause inflation. C) then the policy will be effective at changing employment levels. D) then the policy will be crowded out by the exchange rate.