Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any?
A) the area adc if the supply curve is S0 and the area bec if the supply curve is S1.
B) the area becf under either supply curve.
C) the area afcd if the supply curve is S0 and the area bfce if the supply curve is S1.
D) There is no deadweight loss; revenue raised is used to fund government projects.
A
You might also like to view...
The long-run aggregate supply curve shifts right at the same time as
A) the Laffer curve shifts upward. B) the production possibilities curve shifts inward. C) the production possibilities curve shifts outward. D) the inflation rate increases.
Which of the following statements is likely to be made by someone who believes in the new growth theory?
A) Population growth will limit long-run gains in real GDP per person. B) Competition will encourage discoveries of new ideas leading to greater economic growth. C) Choices made by human capital are likely to be inefficient. D) Economic growth will eventually slow. E) Although technological changes increase real GDP, these changes are random and unexplainable.
The confidence problem of the Bretton Woods systems articulated by Robert Triffin refers to
A) the unwillingness of central banks to accumulate currency for fear of not being able to convert it to gold in case a run on the banks occurs. B) consumer fear of stock market instability. C) producer fear of rising wages. D) the lack of convertibility of gold into silver. E) low consumer spending because of balance of payment crises.
In a two-good economy, the price of video games is $40 and the price of energy drinks is $2. If the annual output of this economy is 100 video games and 500 drinks, the GDP is ________
A) $50,080 B) $25,200 C) $5,000 D) $20,200 E) none of the above