Honduras is an importer of goose-down pillows. The world price of these pillows is $50 . Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras
a. remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases.
b. increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases.
c. increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases.
d. increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.
b
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There are four lighthouses on the island of Sand. If this is the efficient quantity of lighthouses, ________
A) the marginal social benefit of the fourth lighthouse equals its marginal social cost B) total social benefit is zero C) marginal social benefit minus marginal social cost is a maximum D) Both answers A and C are correct.
Figure 9-4
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In Figure 9-4, which expenditure level will result in a recessionary gap?
A. 1 B. 2 C. 3 D. There will be no deflationary gap.
When a transfer price is set higher
a. the profits of the division using the intermediate product will rise b. the profits of the division using the intermediate product will be unaffected c. the profits of the division using the intermediate product will fall d. the costs of the division using the intermediate product will fall
The lower portion of the circular flow model contains factor markets in which households provide:
a. labor, money, and machines. b. savings, spending, and investment. c. natural resources, labor, and capital. d. output of all final goods and services produced.