With reference to the graph above, if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers, then positive analysis would conclude:
A. the policy was effective, since surplus gained by consumers through lower prices is greater than the surplus they lost through deadweight loss.
B. the policy was effective, since surplus lost by producers through lower prices is less than the surplus gained by consumers through lower prices.
C. the policy was ineffective, since the amount of deadweight loss is greater than the surplus gained by consumers from lower prices.
D. the policy was ineffective, since surplus gained by consumers through lower prices is less than the surplus they lost through deadweight loss.
Answer: A
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
In the reality TV show Storage Wars, people bid on the contents of repossessed storage units without being able to evaluate the contents. This is an example of a ________ auction
A) common value B) private value C) Dutch D) second-price
Which of the following is not true about a change in the price level? a. It will shift the aggregate demand curve
b. It will shift the aggregate expenditure curve. c. It will result in a new value of equilibrium real GDP demanded. d. It will change the real value of dollar-denominated assets. e. It will shift the consumption function.
The demand for good X is estimated to be Qxd = 10,000 ? 4PX + 5PY + 2M + AX where PX is the price of X, PY is the price of good Y, M is income, and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. What is the quantity demanded of good X?
A. 61,300 ? 4PX B. 61,500 C. 61,500 ? 4PX D. 61,300