Figure 4.3 illustrates the demand for tacos. A decrease in the demand for tacos is represented by the movement from:
A. point a to point b.
B. point c to point b.
C. D2 to D1.
D. D0 to D1.
Answer: C
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Suppose Political Party A proposes a tax cut on business income to stimulate the economy. Political Party B opposes the tax cut on business income asserting that it would only help businesses, not the average working man and woman
If you were hired as an economist for Political Party A, explain how the tax cut on business income would help the average working man and woman.
When sellers have more information about the quality of a good than buyers do, a relatively large share of the goods in the market will be low-quality goods. This is the ________ problem.
A. free-rider B. law of diminishing returns C. adverse selection D. moral hazard
When an external cost exists in the production of a good, firms tend to
A) under-produce the good since society pays these costs. B) over-produce the good. C) keep production constant throughout the year. D) under-allocate resources to the production of the good.
Assume the government sets a minimum price for a particular good below the equilibrium price. How much quantity traded will this lead to?
A. the equilibrium quantity B. below the equilibrium quantity C. above the equilibrium quantity D. There is not sufficient information.