The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a price floor to achieve their goal. What is the size of the producer surplus?
A. $4 billion
B. $6 billion
C. $10.5 billion
D. $8 billion
D. $8 billion
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The main reason that policy makers are reluctant to force the economy to a zero percent inflation rate is that
A. Unacceptable levels of unemployment might result. B. Businesses would not be able to raise prices. C. Real incomes would fall. D. Businesses would postpone production decisions. E. The PPI formula would need to be recalculated.
Inflation targeting requires monetary policymakers to rely heavily on the Phillips curve.
Answer the following statement true (T) or false (F)
The U.S. negative balance of trade was almost ________ in 2008.
A. $200 billion B. $400 billion C. $600 billion D. $800 billion
Price discrimination is
A. selling a given product at more than one price, with the price differences being unrelated to differences in cost. B. selling a given product to all customers at the same price and same costs. C. selling a given product at more than one price, with the price differences reflecting differences in marginal cost in providing the product to different groups of customers. D. refusing to sell a given product to some group of customers.