The above figure depicts the Edgeworth box for two individuals, Al and Bruce. Part of the contract curve can be found by connecting points
A) a and b.
B) a and c.
C) b and d.
D) c and d.
D
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The imposition of a tax on a good enables the government to
A) raise the price received by sellers of the goods that have been taxed. B) lower the price paid by buyers for the goods that have been taxed. C) create a more efficient economic system. D) take part of consumer and producer surplus as tax revenue when the good is purchased. E) decrease the deadweight loss in this market.
If the difference between the marginal benefit and the marginal cost of a good is as large as possible,
A) resources are being used with maximum efficiency. B) resources would create more value producing other goods and hence the production of this good should be decreased. C) more of the good should be produced. D) allocative efficiency has been attained. E) Both answers A and D are correct.
Assume a bank has total deposits of $100,000 and $20,000 is set aside to meet reserve requirements of the Fed. Its required reserve ratio is:
a. $20,000 b. 20 percent. c. 0.2 percent. d. 1 percent.
In Country X, the government requires employers to collect 9 percent of every employee's compensation as payroll tax. This is an example of
a. progressive tax. b. regressive tax. c. digressive tax. d. proportional tax.