As a result of pure free trade in a commodity, the
A. price of the commodity must be the same in all countries.
B. total quantity imported will exceed the total quantity exported.
C. price of the commodity will be higher in the producing country.
D. price of the commodity will be lower in the producing country.
Answer: A
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Exhibit 5-9 Supply and Demand Curves for Good X
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In Exhibit 5-9, assume the government places a $200 per unit sales tax on Good X. The percentage of the burden of taxation paid by consumers of Good X is:
A. zero. B. 25 percent. C. 50 percent. D. 100 percent.
Assuming the demand curve is more elastic (flatter) than the supply curve, which of the following is true?
A. The full tax is always passed to the consumer no matter how flat (elastic) the demand curve is. B. The full tax is always passed to the seller no matter how flat (elastic) the demand curve is. C. The smaller the portion of a sales tax that is passed to the consumer. D. It does not make any difference how flat (elastic) the demand curve is; the tax is always split evenly between buyer and seller.
If the demand for gadgets increases as a result of a decrease in the price of widgets, the widgets and gadgets are:
A. elastically demanded. B. complementary goods. C. normal goods. D. substitute goods.
The distribution of wealth in the United States is such that it:
A. is randomly distributed among income classes. B. has no perceptible impact on the distribution of income. C. reduces income inequality. D. contributes to income inequality.