The deadweight loss associated with a tax on a commodity is generated by
a. the consumers who still choose to consume the commodity but pay a higher price that reflects the tax.
b. the consumers who choose to not consume the commodity that is taxed.
c. all citizens who are able to use services provided by government.
d. the consumers who are unable to avoid paying the tax.
b
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A price support on milk is not in the interest of milk drinkers, so why do elected public officials successfully implement milk price supports?
A) Milk price supports are in the public interest. B) A small number of households (dairy farmers) gain a great deal, while the costs of the support program is spread among millions of other (milk drinking) households. C) Dairy farmers are selfish. D) Milk drinkers are generally unselfish.
Which of the following statements about the economic decisions consumers, firms, and the government have to make is false?
A) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions. B) Both firms and individuals face scarcity. C) Only individuals face scarcity; firms and the government do not. D) Governments face the problem of scarcity in making economic decisions.
A firm that decides to make a price cut assumes that marginal profit is negative.
Answer the following statement true (T) or false (F)
Suppose an acre of land yields 100 bushels of corn and that one bushel of corn provides enough seed for one-quarter of an acre of land. The opportunity cost of consuming another 100 bushels of corn today is
A) 100 bushels of corn next year. B) 25 bushels of corn next year. C) 10 bushels of corn next year. D) 2.5 bushels of corn next year.