In the above figure, to achieve the efficient amount of paper production, the government could impose a tax of
A) $2 per ton.
B) $8 per ton.
C) $26 per ton.
D) zero, because the efficient amount is produced with no government intervention.
B
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If the price of a product falls below average total cost in the short run, the firm
a. has an economic profit b. cannot cover total fixed costs c. experiences a loss d. must always shut down e. should expand output until MC = MR
Assume a family that earns $20,000 pays $1,000 in income taxes, while a family that earns $40,000 pays $3,750 in income taxes. In this situation, the income tax system is
A) progressive. B) regressive. C) proportional. D) one of the above but we cannot tell which one without more information.
If a game is a fair bet, then people will be willing to play the game regardless of the payoffs.
Answer the following statement true (T) or false (F)
The substitution effect indicates that higher real interest rates ________ current consumption for households who are lenders and ________ current consumption for households who are borrowers
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease