Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to
a. shift the supply curve up by exactly $4 and the price paid by buyers will remain unchanged.
b. shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4.
c. shift the supply curve up by exactly $4 and the price received by sellers will rise by exactly $4.
d. shift the demand curve down by exactly $4 and the price paid by buyers will fall by exactly $4.
Ans: b. shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4.
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Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars. Pacifica could be accused of
A) avoiding import quotas. B) increasing its gains from trade. C) dumping. D) engaging in learning-by-doing.
Part of the argument against deficits is that they
a. increase interest rates and investment. b. increase interest rates and decrease investment. c. decrease interest rates and investment. d. decrease interest rates and increase investment.
The no-trade equilibrium in a perfectly competitive market occurs where:
a. marginal revenue = price. b. marginal cost = total revenue. c. market quantity demanded = market quantity supplied. d. average revenue = price.
If a 10-year Treasury bond pays 3.1 percent and a 10-year corporate bond pays 7.4 percent, what is the interest rate spread on this particular corporate bond?
A. 4.3 percent B. 7.4 percent C. 10.5 percent D. 22.9 percent