The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal. What is the size of the aggregate surplus?
A. $4 billion
B. $12 billion
C. $10 billion
D. $6 billion
B. $12 billion
You might also like to view...
If the marginal propensity to consume is 0.75, then the value of the tax multiplier is
A) -2.5. B) -3. C) 1.25. D) 1.4.
In the expenditure approach to GDP, which of the following would be excluded from measurements of GDP?
A) Government payments for goods produced by foreign firms B) Government payments for goods produced by firms owned by state or local governments C) Government payments for welfare D) All government payments are included in GDP.
A monopsonist purchaser of labor that could negotiate a different wage for each worker could
A) purchase less labor than a regular monopsonist. B) purchase more labor than a regular monopsonist. C) rotate the marginal expenditure curve to the left. D) shift the marginal expenditure curve to the left.
In high schools, all teachers were paid the same based on years of service and regardless of specialization. Beginning in the 1970s, a shortage of science and math teachers developed as private industry paid more for math and science skills than schools could offer. At the same time, a decline in the number of school-age children tended to reduce the demand for all other teachers, which led to a
surplus. The economist's solution to this problem would be a. merit pay to reward the best teachers. b. recognition that all teachers do comparable work and should be paid the same. c. to raise the wages of all teachers. d. to raise the wages of teachers in fields that are in short supply and lower those of others.