Assume the price of gasoline is $2.00 per gallon, and the equilibrium quantity of gasoline is 10 million gallons per day with no tax on gasoline. Starting from this initial situation, which of the following scenarios would result in the largest deadweight loss?
a. The price elasticity of demand for gasoline is 0.1; the price elasticity of supply for gasoline is 0.6; and the gasoline tax amounts to $0.20 per gallon.
b. The price elasticity of demand for gasoline is 0.1; the price elasticity of supply for gasoline is 0.4; and the gasoline tax amounts to $0.20 per gallon.
c. The price elasticity of demand for gasoline is 0.2; the price elasticity of supply for gasoline is 0.6; and the gasoline tax amounts to $0.30 per gallon.
d. There is insufficient information to make this determination.
c
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Goodland is currently operating at full capacity. The country experienced a sudden boom in economic activity. However, the unemployment rate increased soon afterwards. What is likely to have caused such a phenomenon?
What will be an ideal response?
The difference between a tariff and a quota is that the tariff revenue goes to the
A) domestic government. B) holder of the quota license. C) foreign government. D) domestic consumer. E) domestic producer.
The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the specific factors model is equal to ________ and it ________ as more cloth is produced
A) -MPLF/MPLC; becomes steeper B) -MPLF/MPLC; becomes flatter C) -MPLF/MPLC; is constant D) -MPLC/MPLF; becomes steeper E) -MPLC/MPLF; is constant
During 1980-2010, the per-capita incomes of less-developed countries (LDCs)
a. grew rapidly. b. declined. c. were virtually unchanged. d. registered a mixed growth record; some grew rapidly while others stagnated.