If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will
a. increase consumer surplus.
b. reduce consumer surplus.
c. not affect consumer surplus.
d. Any of the above are possible.
a
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Government failure describes a situation where government activity creates negative externalities
Indicate whether the statement is true or false
When the government considers whether it should change its spending in response to a recession, it must weigh the tradeoff between ________ and ________.
A. less output; higher prices B. faster recovery time; inflation C. faster recovery time; lower prices D. more output; lower prices
Refer to Tax Problem. If the government imposes a $10 per unit consumption tax, then how much consumer surplus will there be after the tax.
Consider a perfectly competitive market were demand is Q = 100 - P and Supply is Q = P - 10. a. 600. b. 800. c. 1000. d. 1600.
In the market for used cars, if buyers and sellers have perfect information about the quality of cars, then
A) all cars will sell for the same price and there is no asymmetric information problem. B) all cars will sell for the same price and there is an asymmetric information problem. C) cars sell for their true value and there is no asymmetric information problem. D) all cars will sell for the same price and there is a moral hazard problem.