Which of the following statements about quotas is true?
A. Quotas provide some revenue to the government imposing them, while tariffs merely increase the wellbeing of foreign consumers.
B. Quotas make consumers better off by ensuring that domestically manufactured products are of as high quality as possible.
C. Quotas increase the quantity supplied by encouraging more domestic production.
D. Quotas increase the price above the market equilibrium.
Answer: D
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If a monopolist's production process has economies of scale and average cost exceeds marginal cost, then
A) the government could set price equal to marginal cost and subsidize the monopoly. B) the government should not offer a subsidy, since the monopoly can make a profit setting price equal to marginal costs. C) if the government sets price equal to average cost, the monopoly will go out of business. D) the government cannot regulate price.
If a 5 percent increase in income leads to a 15 percent increase in the quantity demanded of a service, then the income elasticity of demand for that service equals 0.33
a. True b. False
A change in a fixed tax will cause the consumption schedule to
a. become steeper. b. become flatter. c. shift in a parallel manner. d. remain fixed as the economy moves along the schedule.
The price level rises if either
a. money demand shifts rightward or money supply shifts leftward; this rise in the price level is associated with a rise in the value of money. b. money demand shifts rightward or money supply shifts leftward; this rise in the price level is associated with a fall in the value of money. c. money demand shifts leftward or money supply shifts rightward; this rise in the price level is associated with a rise in the value of money. d. money demand shifts leftward or money supply shifts rightward; this rise in the price level is associated with a fall in the value of money.