An export subsidy imposed by a large country can be more damaging to national welfare than an export subsidy imposed by a small country because
A. the consumption effect is necessarily larger for the large country.
B. the net national gains of the large country are overshadowed by the net welfare loss of the world.
C. the terms of trade worsen for the large country but not for the small country.
D. the production effect is necessarily larger for the large country.
Answer: C
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Market equilibrium
i. can never occur because there are always people who want a good but cannot afford it. ii. occurs at the intersection of the supply and demand curves. iii. is the point where the price equals the quantity. A) ii only B) iii only C) ii and iii D) i only E) i and ii
The loss associated with the fact that at the profit-maximizing quantity consumers value the goods more than it cost to produce them is called
A) deadweight loss. B) comparative loss. C) Lerner Loss. D) Consumer Value Loss.
Using prices to promote efficiency in the utilization of bridges,
A. higher prices should be charged for the use of the most crowded bridges. B. lower prices should be charged for the use of the uncrowded bridges. C. traffic would be equalized among the bridges where space is a scarce resource. D. All of the responses are correct.
A country producing a combination of 5 units of guns and 6 units of butter would be _________________ (outside/on/inside) the production possibilities curve.
