Sammy has a drone that he values at $1,500. Frank values the same drone at $1,000. The government offers a subsidy of $800 to the buyers of drones, and Sammy and Frank agree on a price of $1,600. The subsidy creates a deadweight loss of
A) $0
B) $200
C) $500.
D) $800.
C
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The upward slope of the supply curve reflects the
A. principle of specialization in production. B. fact that price and quantity supplied are inversely related. C. law of increasing substitution. D. principle of diminishing marginal productivity
The biggest problem thwarting economic growth in the poorest countries, compared to the richest countries, is:
A. a legal and/or political environment unfavorable to economic growth. B. outdated physical capital. C. insufficient human capital. D. no access to technology.
An externality is a side effect from an exchange that affects someone other than the buyer and seller.
Answer the following statement true (T) or false (F)
Which of the following statements is CORRECT?
A) When both demand and supply increase, the quantity decreases and the price might rise, fall, or remain the same. B) When both demand and supply increase, the price rises and the quantity might increase, decrease, or remain the same. C) When both demand and supply decrease, the quantity increases and the price might rise, fall, or remain the same. D) When both demand and supply decrease, the quantity decreases and the price might rise, fall, or remain the same.