Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that:
A. Ben's statement is normative, but Holly's is positive.
B. Holly's statement is normative, but Ben's is positive.
C. Both statements are normative.
D. Both statements are positive.
Answer: B
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Which of the following would shift the supply curve for a good to the left?
a. an increase in the price of that good b. a decrease in the price of an alternative good c. an improvement in technology for producing that good d. an increase in the cost of an important resource used to make that good e. an increase in the number of producers
In Figure 8.10, airline Fly Smart is initially a secure monopoly between two cities X and Y at point M, serving 300 passengers per day at the profit-maximizing price of $300 per ticket. Suppose that Fly Smart discovers that a second airline is contemplating entering the market. If the minimum market entry quantity is 130 passengers per day, what price should Smart Fly charge to secure the entry-deterring quantity?
A. $300 B. $220 C. $180 D. $100
Producer surplus
A. Is the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price. B. Rises as equilibrium fall C. Is the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept. D. Is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price.
The relationship between money supply, output, and the overall level of prices is illustrated by the:
A. classical theory of inflation. B. neutrality of money. C. aggregate price level. D. measure of real output.