Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. Suppose the Brazilian government subsidizes the export of coffee by $0.42 per pound
Which of the following would be an outcome of this subsidy? A) Brazilian producers experience an increase in producer surplus.
B) Brazilian consumers experience an increase in consumer surplus.
C) Producers from the rest of the world experience a gain in producer surplus.
D) Brazilian coffee exports would decrease.
A
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An improvement in production technology will
A. shift the demand curve to the left. B. shift the supply curve to the left. C. shift the supply curve to the right. D. increase equilibrium price.
According to the Keynesian approach, a decrease in taxes
A) will decrease consumption, as the government will have to spend less. B) will not impact consumption, as most consumption is autonomous. C) will increase consumption exactly by the amount of the taxes. D) will increase consumption by an amount of less than the change in taxes.
The downside to targeting specific activities rather than the externality itself is:
A. it risks misaligning the incentives that producers and consumers face with the goal of minimizing the externality. B. it requires a number of different activities to be identified and several different policies to be written, which can be cumbersome and difficult to manage. C. any one activity is likely to not make a significant difference in the presence of an externality. D. All of these statements are true.
Suppose there are only two steel firms in the steel industry and their prices are equal to or very close to their ATCs. This circumstance suggests that
a. steel firms are not profit maximizing b. steel has no close substitutes c. the demand for steel is weak d. quantity supplied is less than quantity demanded at the market prices e. close substitutes are produced in other industries