Suppose the price of gasoline is $3.50 per gallon, the quantity of gasoline demanded is 150 billion gallons per year,
the price elasticity of demand for gasoline is -0.06, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon, which increases the price of gasoline by $0.75 per gallon. What is the new equilibrium quantity of gasoline demanded after the tax is imposed?
A) 109.72 billion gallons per year B) 127.25 billion gallons per year
C) 148.27 billion gallons per year D) 161.61 billion gallons per year
C
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Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?
What will be an ideal response?
Assuming a homogeneous product, the Bertrand equilibrium price is
A) independent of the number of firms. B) independent of the firm's marginal costs. C) equal to the Cournot equilibrium price. D) equal to the monopoly price.
According to the monetarists, deliberate government intervention:
a. will stabilize the economy if the money supply is increased during recessions and decreased during expansions. b. will effectively reduce the unemployment rate below its natural rate. c. will stabilize the economy if the money supply is reduced during recessions and increased during expansions. d. will destabilize the economy only if the government uses fiscal policy to change equilibrium income. e. will destabilize the economy and cause a business cycle of its own, regardless of whether fiscal or monetary policy is used.
Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely
a. have no impact on the growth rate of real GDP per person. b. decrease the growth of real GDP per person for a few years. c. increase the growth of real GDP per person for several decades. d. permanently increase the growth rate of real GDP per person.