Suppose the United States chose to legalize the production and use of marijuana, but also decided to put a tax on the good (with the tax paid by producers). After doing so, suppose that the price that consumers paid rose, and the amount that growers got to keep fell. This would
A. indicate that the demand-side effect was smaller than the net supply-side effect.
B. be shockingly counter-intuitive, because there would be no supply-and-demand model that could explain it.
C. suggest that the supply curve is vertical.
D. indicate that the demand-side effect was greater than the supply-side effect.
Answer: D
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Which of the following does not take place in the direct finance market?
A) Ownership in corporations is sold in the form of preferred stock. B) Ownership in corporations is sold in the form of common stock. C) Corporate bonds are sold to savers. D) Deposits from savers are accumulated and loans made to borrowers.
If national income = $5,000 . autonomous consumption = $200, the MPC = 0.80, and intended investment demand is $800, then actual investment will
a. equal intended investment, and the economy will be in equilibrium b. be less than intended investment, and production and incomes will grow c. be greater than intended investment, and production and incomes will fall d. be less than intended investment, and production and incomes will fall e. be greater than intended investment, and production and incomes will grow
At a price of $20 per unit, 140 units of good are demanded and 100 units are supplied. When the price is raised to $30 per unit, 100 units are demanded and 140 units are supplied. The price elasticity of supply in this range is:
A. 0.417. B. 1.20. C. 0.835. D. 1.0.
Which of the following will shift the aggregate demand curve to the right, ceteris paribus?
A) an increase in interest rates B) a decrease in disposable income C) a decrease in expected profits for firms D) an increase in net exports