Suppose the market demand function for ice cream is Qd = 10 - 2P and the market supply function for ice cream is Qs = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The consumer surplus with the tax is:

A. $166,667.

B. $3.56 million.

C. $7.11 million.

D. $9 million.


C. $7.11 million.

Economics

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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.

A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease

Economics

According to the table shown, what is the market price?

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market.

A. $500
B. $150
C. $50
D. $27.50

Economics

Which of the following is an example of an injection into the circular flow of income and expenditure?

a. Consumption b. Exports c. Taxes d. Saving e. Government borrowing

Economics

If a developing country has sufficient reserves, the buying and selling of foreign currency by the central bank is:

A. likely to have a much smaller impact on the exchange rate than in developed countries. B. completely ineffective on the exchange rate. C. likely to have a much greater impact on the exchange rate than in developed countries. D. likely to have roughly the same impact on the exchange rate as in developed countries.

Economics