Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause farmers to:
A. raise the production of wheat and corn.
B. lower the production of corn and wheat.
C. substitute corn for the production of wheat.
D. substitute wheat for the production of corn.
Answer: D
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Taxes:
A. may benefit many of the consumers in the market. B. are sometimes used to correct market failures. C. are sometimes used to transfer surplus from producers to consumers. D. are sometimes used to transfer surplus from consumers to producers.
Which of the following measures the effect a price change of a good will have on the desire for another good?
a. equilibrium elasticity of demand b. cross-price elasticity of demand c. revenue elasticity of demand d. income elasticity of demand
Refer to the graph shown. If labor costs $10 per unit and machines cost $15 per unit, the economically efficient cost of producing 500 units of output is:
A. $150. B. $100. C. $300. D. impossible to determine using the information given.
The sum of public spending on goods and services and transfer payments during a given period cannot exceed tax revenues plus borrowed funds. This is the statement for
A) ad valorem taxation. B) an excise tax. C) a sales tax. D) the government budget constraint.