Refer to Scenario 19.4 below to answer the question(s) that follow. SCENARIO 19.4: Suppose demand for widgets is given by the equation P = 10 - 0.25Q. Originally, the price of the good is $5 per unit. When a tax of $1 per unit is imposed, the price of the good rises to $6 per unit.Refer to Scenario 19.4. What is the excess burden of the tax?
A. $2
B. $18
C. $32
D. $50
Answer: A
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Adverse selection is created by
A) incentives to change behavior after two parties have reached an agreement. B) risk. C) lump-sum taxes. D) private information.
All of the following are limitations of direct consumer surveys except:
A) the possibility that consumers' responses may not reflect their actual behavior in the market place. B) the possibility of response biases because survey respondents may not want to reveal their true preferences. C) the likelihood that respondents will deliberately and systematically mislead interviewers. D) the possibility that the type of questions asked may unintentionally bias the respondent's answers.
"The costs and benefits for a country from joining a fixed-exchange rate area such as the EMS depend on how well-integrated its economy is with those of its potential partners." Discuss
What will be an ideal response?
If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then the firm's Lerner Index equals
A) 58/16. B) 16/42. C) 58/42. D) 42/58.