Suppose Luke values a scoop of Italian gelato at $4 . Leia values a scoop of Italian gelato at $6 . The pre-tax price of a scoop of Italian gelato is $2 . The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5 . The deadweight loss from the tax is
a. $4, and the deadweight loss comes from both Luke and Leia.
b. $4, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.
c. $2, and the deadweight loss comes from both Luke and Leia.
d. $2, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.
d
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Based on the information in Scenario 1, nominal GDP in 2015 in this economy was
A) $830. B) $1,025. C) $1,090. D) $1,345.
Money that can be used to purchase capital goods is known as
a. financial capital. b. profit. c. liquid capital. d. interest.
Explain and demonstrate graphically the situation of an overvalued exchange rate in a fixed exchange rate system. What alternative policies are available to eliminate the overvaluation of the exchange rate?
What will be an ideal response?
The prices of certain goods, such as ice and gasoline, often increase after a natural disaster such as a hurricane. The economic explanation for this observation is that
A) people panic in disaster situations. B) disasters bring out the worst in people. C) the disaster temporarily reduces the supply of the goods and increases the demand for the goods. D) the disaster temporarily reduces the supply of the goods and reduces the demand for the goods.