Which of the following is an example of a backward linkage?
a. A car industry creates a need for car dealerships.
b. A compact disc industry creates a need for CD players.
c. The development of a shoe industry creates a demand for a leather industry.
d. An increase in the population increases the demand for food.
e. New educational facilities improve the literacy rate of the population.
C
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In the figure above, an economy would grow fastest if it produces at point
A) A. B) B. C) C. D) D.
Suppose the inverse demand curve for good A is given by the equation P A = 10 - Q A /10, and the supply curve is perfectly elastic (horizontal) at $1. Good A is presently taxed at $2 per unit. Good B (which is independent of good A) has an inverse demand curve, P B = 5 - Q B /20, and is also perfectly elastic at $1. Good B is untaxed.
(A) How much tax revenue is collected and what is the excess burden of the $2 tax on A? (B) How much revenue is collected if the tax on good A is reduced to $1 per unit and good B is taxed at $1 per unit? (C) What is the total excess burden of taxing both goods at $1 per unit? (D) Which tax system is preferable from the point of view of economic efficiency?
A credit constraint is:
A. the inability to get a loan even though a person expects to be able to repay the loan plus interest. B. the inability to repay a loan even though a person has acceptable credit history. C. the ability to take on more loans than one can repay. D. the maximum amount of load one is entitled to take.
When network externalities are present:
A. a person's demand cannot be affected by the number of other people who have purchased the good. B. we can obtain the market demand curve simply by summing individuals' demands. C. one person's demand also depends on the demands of other people. D. the social cost of production is larger than the private cost