Even if a tax imposed in a market generates a loss in surplus for the participants in that market, the tax could still increase economic efficiency if:
A. the government needs to generate tax revenue.
B. the public expenditures financed by the tax lead to a big enough increase in economic surplus.
C. the tax revenue is used to fund spending by local governments.
D. voters approve of the tax.
Answer: B
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If inputs into production cannot be substituted for each other but have to be employed in fixed proportions isoquants are straight, downward-sloping lines
Indicate whether the statement is true or false
For which of the following products is the consumer's demand curve most likely to be vertical?
a. lobster, for a seafood lover b. cars, for high school students c. insulin, for a diabetic d. compact disks, for a music lover e. beef, for a food lover
The three-step procedure for economic analysis
a. works better in macroeconomics than in microeconomics b. begins with characterizing the market c. helps governments decide how to change the market equilibrium d. focuses on goals and constraints e. is used only in microeconomics
If a recession were to reduce the demand for loans, ceteris paribus,
A) the interest rate will increase. B) the interest rate will not change. C) the interest rate will decrease. D) the number of loans will increase.