Which of the following is a reason why a country barely at subsistence levels cannot achieve growth very easily?
a. It cannot decrease capital goods in order to increase consumption goods.
b. The lower income means that Say's law does not apply here.
c. Too much savings exist and therefore it remains underutilized.
d. It cannot decrease consumption goods in order to increase capital goods.
e. It cannot decrease capital goods in order to also decrease consumption goods.
D
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The additional cost resulting from a small increase in some activity is called the
A) marginal cost. B) diminishing returns of the activity. C) opportunity cost. D) marginal benefit.
Why do rent ceilings lead to shortages and black markets?
What will be an ideal response?
With rent seeking by a monopoly
A) the monopolist's average total costs will increase so that its average total cost curve is tangent to the demand curve at the profit-maximizing price. B) a monopoly uses all of what would be its economic profit to prevent other firms from taking its economic rent. C) the full deadweight loss of monopoly is larger than in the absence of rent seeking. D) All of the above answers are correct.
The government of Bassaland is looking for new revenue sources. It is considering imposing an excise tax on two goods: palm wine and diapers
If the price elasticity of demand for the goods are -0.47 and -1.89 respectively, which good should it tax if the goal is to raise revenue? If the government wants to tax only one good, which good should it tax if the goal is to discourage consumption? Explain your answer.