Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300 . The deadweight loss from the tax is
a. $250.
b. $500.
c. $750.
d. $1,000.
a
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Scooters and bicycles are substitutes. Suppose that the price of a bicycle falls. Which of the figures above best illustrates how this fall in price affects the demand curve for scooters?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the above answers is correct because the change in the price of a bicycle will affect the supply curve not the demand curve.
Which of the following is correct when the perfectly competitive firm is producing its long-run equilibrium output level?
a. MR equals MC. b. AR equals ATC. c. P equals MC. d. All of these.
Big Woods is a lumber firm that sells plywood sheets to local builders. If the annual holding cost of a sheet of plywood is $15 and the managers of Big Woods order 500 sheets of plywood, what is the total annual carrying costs of the inventory?
A) $8,500 B) $3,750 C) $7,500 D) $3,000
The effects of the national health care program on labor markets will
A) lower the effective wage rate that they must pay for each unit of labor. B) decrease the marginal revenue product of labor. C) increase the marginal revenue product of labor. D) move upward along their downward-sloping marginal-product-of-labor curve.