Explain the excess burden of a tax on luxury yachts.
What will be an ideal response?
A tax on luxury yachts, say of $1,000, will cause some potential buyers to switch to their next best alternative. Perhaps the individuals will invest in diamonds. But they will be worse off, because they are now consuming a less preferred option. This is the excess burden.
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The three largest firms in an industry have market shares of 40 percent, 30 percent, and 2 percent. The remaining 47 firms in the industry each have a market share of 1 percent. The Herfindahl-Hirschman Index (HHI) for this industry is
A) 2,551. B) 5,184. C) 24,061. D) 10,000. E) 3,013.
Collusion occurs when
a. a firm chooses a level of output to maximize its own profit b. firms get together to maximize joint profits c. firms refuse to follow their price leaders d. firms petition their U.S. senators for favors e. two firms' price and output decisions come into conflict
The social and economic environment plays a secondary role when compared to the importance of land, labor, capital, and entrepreneurship
Indicate whether the statement is true or false
Refer to the figure below. At the equilibrium price of $6, the sellers' total revenues are equal to:
A. $300
B. $50
C. $360
D. $150