Refer to Scenario 19.4 below to answer the question(s) that follow. SCENARIO 19.4: Suppose demand for widgets is given by the equation P = 10 - 0.25Q. Originally, the price of the good is $5 per unit. When a tax of $1 per unit is imposed, the price of the good rises to $6 per unit.Refer to Scenario 19.4. What is the excess burden of the tax?
A. $2
B. $18
C. $32
D. $50
Answer: A
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Suppose there is a reduction in cash flow. This suggests that
A) firms have decreased their expectations of future profits. B) the real interest rate has increased. C) the rate of depreciation has increased. D) current profits have decreased. E) all of the above
Which one of the following is NOT included in GDP?
A. You give up a weekend of leisure to repair your roof yourself. B. You purchase $20 worth of first aid supplies at the local drugstore to treat the cuts and scrapes you suffered while crawling around on the roof. C. You pay a roofer $2,000 to repair your roof after you discover leaks have appeared due to normal wear and tear. D. You pay a roofer $2,000 to repair your roof after it is damaged in a hailstorm.
All else equal, a smaller elasticity of the supply curve to the other firms leads to a ________ individual firm's residual elasticity of demand
A) less elastic B) unit elastic C) more elastic D) zero
Primary dealers are those
A) permitted to trade directly with the Fed. B) who work under the account manager at the Federal Reserve Bank of New York. C) who specialize in selling bonds to small private investors. D) responsible for assuring that interest rates do not decline unless the FOMC has given specific instructions that they decline.