The effect of a government subsidy in a market where a positive externality is present is:
A. to make consumers internalize the external benefit.
B. to increase efficiency.
C. to increase surplus.
D. All of these statements are true.
Answer: D
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Refer to the scenario above. What is the sum of the payoffs to the firms if both firms use Strategy A?
A) 1 B) -2 C) 2 D) 0
A unit tax has an advantage over an ad valorem tax in situations when _____
a. inflation is high b. it is easy to estimate the value of the good being taxed c. it is difficult to estimate the value of the good being taxed d. inflation is low
A renewable resource:
A. can be replenished naturally over time. B. is used to regenerate an old piece of capital. C. is used when adopting new technology, and replacing old capital. D. cannot be replenished naturally over time.
If nominal GDP increases 4 percent during a year, and real GDP increases 7 percent during the same year, which of the following must by true?
a. The total value of GDP must have increased 11 percent during the year. b. The general level of prices as measured by the GDP deflator decreased by approximately 3 percent during the year. c. The general level of prices as measured by the GDP deflator increased by approximately 3 percent during the year. d. Imports must have been about 3 percent larger than exports during the year.