The welfare loss of a tariff equals that of an import quota that leads to the same level of imports
Indicate whether the statement is true or false
False. In the case of a tariff the government receives revenue which does not reduce welfare. With a quota this amount is often lost to foreign importers.
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Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. If 8,000 pounds of pecans are sold
A) marginal benefit is equal to marginal cost. B) the deadweight loss is equal to economic surplus. C) producer surplus equals consumer surplus. D) the marginal benefit of each of the 8,000 pounds of pecans equals $9.
The effect of antidumping laws is to
A) put a floor on foreign prices. B) lower consumer surplus in the importing country. C) encourage domestic firms to allege dumping even when it might not be true. D) All of the above.
The cyclical deficit is that portion of the deficit
a. that results from the economy being below the natural rate of output. b. that would exist even if the economy were at its natural rate of output. c. is a function of the level of automatic stabilizers. d. both a and c. d. None of the above
A fundamental reason that governments provide public goods is that
A) those goods are subject to the free-rider problem. B) negative externalities are part of the production process of those goods. C) public goods are merit goods. D) those goods are perfectly divisible.