Suppose a tax of $3 is imposed on each new garden hose that is sold, resulting in a deadweight loss of $22,500 . The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. Before the tax was imposed, the equilibrium quantity of garden hoses was 100,000 . We can conclude that the equilibrium quantity of garden hoses after the tax
is imposed is
a. 75,000.
b. 85,000.
c. 90,000.
d. 95,000.
b
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Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays annual compound interest, and you do not withdraw from the account until your retirement at the age of 65, 44 years later. How much more will be in your account if the interest rate is 6 percent rather than 5 percent?
A. $440 B. $4,428 C. $1,549 D. $8,557
The basic truth that underlies the study of economics is the fact that we all face
A. risk. B. scarcity. C. death. D. taxes.
A country reports that unplanned inventories increased during 2012. The increase in unplanned inventories leads to
A) firms decreasing production, which decreases GDP. B) actual aggregate expenditure being different than real GDP. C) consumers increasing their consumption expenditure, which increases GDP. D) firms increasing production, which increases GDP. E) the government decreasing production, which decreases GDP.
During the period from 1970 to the present, the U.S. economy experienced a Great Inflation, a Great Moderation, and a Great Recession. How does this sequence illustrate the concept of a "business cycle"?
What will be an ideal response?