In 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. In 2005 the price of water doubled. The community then drilled the well deeper and started pumping again. In this community,
A. water production is characterized by increasing opportunity costs.
B. markets cannot reach equilibrium because there is a persistent shortage of water.
C. the supply of water is perfectly inelastic because it is a finite resource.
D. higher water prices can reduce quantity demanded but cannot increase quantity supplied.
Answer: A
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The total amount of taxes paid divided by before-tax income is the
A) median taxpayer rate. B) rate of hysteresis. C) average tax rate. D) marginal tax rate.
Explain and demonstrate graphically how targeting the federal funds rate can result in fluctuations in nonborrowed reserves
What will be an ideal response?
Christoph is a landlord in an area where rent controls have set the maximum price he can charge below the competitive equilibrium price. How can a landlord like Christoph be a “winner” in this situation?
a. by expanding his business and buying more properties b. by spending more to maintain his properties in perfect condition c. by breaking the law and finding ways to charge his tenants more d. by increasing demand by charging his tenants even less than the price ceiling
The table below shows the consumption schedule for a hypothetical economy. All figures are in billions of dollars.RGDPConsumption$600$590610598620606630614640622650630660638If investments were fixed at $16, taxes were zero, government purchases of goods and services were zero, and net exports were zero, then equilibrium real GDP would be $630 initially. If government purchases were then raised from $0 to $10 and lump-sum taxes also increased from $0 to $10, other things constant, the equilibrium real GDP would become
A. $630. B. $650. C. $660. D. $640.