Which of the following is an example of a tax based on the benefits principle?
a. An income tax
b. A lump-sum tax assessed on household in town to finance the construction of soccer fields
c. A gasoline tax imposed by a city to be used to upgrade facilities local high school
d. A toll road
d
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If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease
a. True b. False Indicate whether the statement is true or false
A high price-earnings ratio for a stock indicates that either the stock is
a. undervalued or people are relatively optimistic about the corporation's prospects. b. overvalued or people are relatively optimistic about the corporation's prospects. c. overvalued or people are relatively pessimistic about the corporation's prospects. d. undervalued or people are relatively pessimistic about the corporation's prospects.
Suppose that on Monday, a Big Mac cost $3.00 in the United States and 310 Japanese yen in Japan. On Monday, the exchange rate was $1 = 85 yen. According to the purchasing power parity theory, the yen was __________ by approximately __________ percent
A) overvalued; 22 B) undervalued; 40 C) overvalued; 29 D) undervalued; 22 E) overvalued; 18
The market price for wallets is $20. Your technology is such that at your most efficient production point, the average total cost of producing a wallet is $2.50. Your manager runs into your office and shouts, "Boss!!! Average costs are rising!! Average costs are rising!!" To make a profit-maximizing decision, you should:
A. ask the manager about the average total cost. B. immediately stop production. C. completely ignore your manager. D. ask the manager about the marginal cost.