A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade):$20 per bottleDomestic production (free trade):500,000 bottlesDomestic production (after tariff):600,000 bottlesDomestic consumption (free trade):750,000 bottlesDomestic consumption (after tariff):650,000 bottles Calculate the government revenue from the tariff.
A. $1.25 million
B. $3.75 million
C. $250,000
D. $125,000
Answer: C
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a. Government will keep capacity the same. b. Government increase capacity to reduce congestion. c. Government will encourage telecommuting. d. Government will produce an inefficient level of highways to maximize social welfare.
The change in consumption resulting from a change in real income
a. demand curve b. income effect c. elastic d. inferior good
As real disposable income decreases, the average propensity to consume (APC)
A. is always be below MPC. B. increase. C. remains unchanged. D. decreases.
If the income elasticity for Ramen Noodles is -3.0, we may conclude that Ramen Noodles are __________.
A. a normal good B. a inferior good C. both a normal good and an inferior good D. neither a normal good nor an inferior good