Figure 4-6
The deadweight loss of the tax illustrated in is given by the area
a.
ABEH.
b.
DFE.
c.
EKG.
d.
EFG.
c
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If the cross elasticity of demand for potato chips and pretzels equals 1.5,
a. potato chips and pretzels must both be luxury goods. b. either potato chips or pretzels must be a luxury good, and both may be luxury goods. c. potato chips and pretzels must be substitutes. d. potato chips and pretzels must be complements.
When the price of an input _____, a firm's least-cost production method never uses ______ of that input and usually employs _____.
A. increases; less; the same amount B. increases; less; more C. decreases; more; less D. decreases; less; more
Suppose an economy's entire output is cars. In Year 1, all manufacturers produce cars at $15,000 each; the real GDP is $300,000. In Year 2, 20 cars are produced at $16,000 each. What is the real GDP in Year 2?
(A) $280,000 (B) $20,000 (C) $320,000 (D) $300,000
For most commonly used social welfare functions, an efficient allocation is
A) always preferred over any inefficient allocation. B) not possible. C) usually preferred. D) never preferred.