If the government is most interested in minimizing excess burden of an excise tax, should it impose the tax on goods that are elastic or on goods that are inelastic?
What will be an ideal response?
If the government wants to minimize the excess burden of excise taxes, the taxes should be imposed on goods whose demand is inelastic.
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The figure above shows the market for coffee. If the efficient quantity of coffee is produced, the producer surplus is
A) $10 million. B) $20 million. C) $60 million. D) zero.
The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses). If the exchange rate is 1
50 $/€ then A) the U.S. has a comparative advantage in the production of beer. B) neither country has a comparative advantage in the production of beer. C) the U.S. has a comparative advantage in the production of pizza. D) the U.S. has a comparative advantage in the production of beer and pizza.
One way the consumer price index (CPI) differs from the GDP chain price index is that it:
a. includes only purchases of items bought by typical urban consumers. b. uses only current year quantities. c. is based on all final goods and services. d. includes only services.
Which of the following is true of the banks that operate under Islamic law?
a. Islamic banks are not allowed to lend out to private firms. b. Islamic banks do not function as intermediaries between borrowers and lenders. c. Islamic Banks are not allowed to offer checking accounts or traveler's checks. d. Islamic banks are required to offer trade-related services free of cost. e. Islamic banks do not charge interest on loans or pay interest on deposits.