Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
After trade, at a world price of Pw, total economic surplus equals area(s)
A. A + B + C + D.
B. A + B + C + D + E + F + J + I.
C. A + B + C + D + E + F.
D. D.
Answer: C
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A vertical LM curve means that
A) monetary policy has no impact on the interest rate. B) monetary policy has no impact on income. C) fiscal policy has no impact on the interest rate. D) fiscal policy has no impact on income.
There are generally, in most areas, a large number of qualified physicians whose services are highly personalized. In addition to price, factors such as age, sex, location, and personality influence the choice of physician. Thus, the market is best described as
A. perfectly competitive. B. a differentiated oligopoly. C. a monopoly. D. monopolistically competitive.
Which of the following financing tactics would most likely help an MNE avoid bankruptcy?
A) integrating e-commerce opportunities with domestic sales in order to maintain a steady balance of income and expenditures B) agreeing to forward contracts with customers and hedging purchases and sales on future currency rates C) organizing the capital structure so that the amount of debt financing is twice the level of equity financing D) keeping the percentage of debt in the capital structure to a level that can be managed even during difficult business conditions
The Taylor rule states that if real GDP rises 1 percent above potential GDP the federal funds rate should be raised, relative to the current inflation rate, by ______.
a. 0.5% b. 1% c. 2% d. 4%