The actual benefit of a government subsidy is determined primarily by
a. the elasticities of demand and supply.
b. the legal (or statutory) assignment of the subsidy
c. the number of exchanges that are made possible as a result of the subsidy.
d. whether the subsidy is paid by cash or check.
A
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Consider a market with a price ceiling. If the price ceiling is lowered which of the following would happen?
a. The consumer surplus would increase, the producer surplus would decrease and the dead weight loss would decrease b. The consumer surplus would increase, the producer surplus would decrease and the dead weight loss would increase c. The consumer surplus, the producer surplus and the dead weight loss would all decrease d. The consumer surplus, the producer surplus and the dead weight loss would all increase e. The consumer surplus would decrease, the producer surplus would increase and the dead weight loss would increase
A lower marginal propensity to consume is most likely to result in a(n): a. flatter aggregate expenditure line
b. steeper aggregate expenditure line. c. upward shift of the aggregate expenditure line. d. downward shift of the aggregate expenditure line.
If the economy is inside the production possibilities curve, then more output can be produced using existing resources.
Answer the following statement true (T) or false (F)
Asymmetric information exists in the market for used cars because:
A. sellers have better information concerning the quality of used cars than buyers. B. buyers have better information concerning the quality of used cars than sellers. C. buyers and sellers have equal information concerning the quality of used cars. D. it is impossible for buyers or sellers to determine the quality of used cars.