Each year around July 4 the town of Flagston has a controversy over how big a fireworks display they should have on the holiday. The three citizens have the demand functions for fireworks that are shown here. The cost per firecracker is $18. Elmer has the demand function P = 20 - Q. Ethel's demand equation is P = 12 - .6Q, and Edith has the demand P = 8 - .4Q. If the fireworks show is left to the private marketplace, what is likely to happen?
What will be an ideal response?
If Elmer, Ethel, and Edith do not get together on the project and a private entrepreneur fireworks salesperson attempts to sell them the firecrackers at the $18 marginal cost, Elmer will buy 2 and the rest will not buy any. They will be free riders on Elmer's small display of patriotism.
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You turn to the Treasury bond market page of a newspaper and look under the column headed "Bid" and see that it says, "125:8" this indicates that
A. the price that the buyer is willing to pay for this bond is $125.08. B. the price that the buyer is willing to pay for this bond is $1,252.50. C. the price that the seller is willing to sell this bond for is $125.80. D. the price that the seller is willing to sell this bond for is $125.08.
The term "surplus" refers to a:
A. market that sells secondary goods. B. situation in which the quantity supplied is less than the quantity demanded. C. situation in which the quantity demanded is less than the quantity supplied. D. signal that producers need to increase the price of the good.
An increase in demand for a good will lead to a larger increase in price if the supply is relatively elastic.
Answer the following statement true (T) or false (F)
Regarding the costs of regulation, which is a FALSE statement?
A) Airline safety standards have increased the price of air travel. B) Automobile safety standards raise the price of cars. C) Regulatory spending by federal agencies has decreased since 1970. D) Pharmaceutical manufacturing safety standards raise the price of drugs.