Suppose that you have two people in an economy, Ms. Hundley and Mr. McKenna, who want to produce a public good S. Suppose we calculate the Lindahl equilibrium using the method in your textbook. In this case, the demand curve for Ms. Hundley is S = P 1/2 . The demand curve for Mr. McKenna is S = 8/P. If the marginal social cost of the project is 10, what is the Lindahl equilibrium quantity of S? What are the Lindahl prices?
What will be an ideal response?
Set P 1/2 = 8/P. Multiply both sides by P, leaving P 3/2 = 8. Therefore, P = 8 2/3 = 4. At P = 4, S* = 2.
Mr. McKenna pays 4. Ms. Hundley pays 6.
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A) employed and out of the labor force. B) unemployed and out of the labor force. C) employed and in the labor force. D) unemployed and in the labor force.
Refer to the information provided in Figure 33.2 below to answer the question(s) that follow.
Figure 33.2Refer to Figure 33.2. England has
A. a comparative advantage in producing cars. B. no comparative advantage in producing either cars or trucks. C. a comparative advantage in producing trucks. D. an absolute advantage in producing cars.
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A. the United States will import handbags from Spain and Spain will import cognac from the United States. B. the United States will import both handbags and cognac from Spain. C. Spain will import both handbags and cognac from the United States. D. the United States will import cognac from Spain and Spain will import handbags from the United States.
Consumers who clip and redeem discount coupons:
A. Exhibit the same price elasticity of demand for a given product than consumers who do not clip and redeem coupons B. Exhibit a higher price elasticity of demand for a given product than consumers who do not clip and redeem coupons C. Exhibit a lower price elasticity of demand for a given product than consumers who do not clip and redeem coupons D. Cause total revenue to decrease for firms that issue coupons for their products