Carefully explain why tariffs create deadweight losses
What will be an ideal response?
Tariffs reduce domestic consumption and increase domestic production. This means that some consumers that value this good more than its cost are not able to purchase it, which reduces consumer surplus without benefitting anyone. Likewise, domestic producers increase their production, but their costs are higher than world costs. Thus that additional cost of production does not benefit the producers; it is simply a waste of resources.
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Keynesians believe that velocity of money is stable and predictable
Indicate whether the statement is true or false
Rob's income rises from $50,000 to $60,000 and his income tax increases from $6,000 to $7,500.His marginal tax rate is 12.5%
a. True b. False Indicate whether the statement is true or false
Inducements to act in particular ways are called
A) collusive tactics. B) incentives. C) trade-offs. D) opportunity costs.
Short-run aggregate supply is greater than long-run aggregate supply in the misperceptions theory if
A) the actual price level is greater than the expected price level. B) the actual price level equals the expected price level. C) the actual price level is less than the expected price level. D) output is less than its full-employment level.