In Figure 5-7, budget line B compared to A clearly shows that the
A. price of wine increased.
B. price of beer decreased.
C. price of beer increased.
D. consumers’ money income increased.
Answer: B
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A open market purchase of government securities by the Fed will cause which of the following?
A) an increase in the equilibrium quantity of reserves B) a reduction in the federal funds rate C) an increase in the amount of excess reserves that banks will wish to hold D) all of the above
Which would be an example of a price ceiling?
A) rent controls. B) a legally-specified maximum interest rate on student loans. C) government-mandated lower prices and fees charged by physicians. D) all of the above. E) none of the above.
Use Figure 9-6 to answer questions a-i
a. Following the imposition of the tariff, what is the price that domestic consumers must now pay and what is the quantity purchased? b. Calculate the value of consumer surplus with the tariff in place. c. What is the quantity supplied by domestic sugar producers with the tariff in place? d. Calculate the value of producer surplus received by U.S. sugar producers with the tariff in place. e. What is the quantity of sugar imported with the tariff in place? f. What is the amount of tariff revenue collected by the government? g. The tariff has reduced consumer surplus. Calculate the loss in consumer surplus due to the tariff. h. What portion of the consumer surplus loss is redistributed to domestic producers? To the government? i. Calculate the deadweight loss due to the tariff.
When government owns a natural monopoly and avoids subsidies, it:
A. still creates deadweight loss. B. sets price above marginal cost. C. recognizes setting price equal to marginal cost would cause the enterprise to incur losses. D. All of these statements are true.