Refer to Sales Tax. After the tax is imposed, consumers' surplus is equal to
The following questions refer to the accompanying diagram which shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. area A + B.
b. area B.
c. area B + C.
d. area A + B + C + D + E.
a. area A + B.
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At the utility maximizing equilibrium for two goods, X and Y, which of the following must be TRUE?
A) The marginal utility per dollar spent on X will exceed the marginal utility per dollar spent on Y. B) The total expenditure will be the same for each good. C) The marginal utility per dollar from X equals the marginal utility per dollar from Y. D) The marginal utility will be the same for each good.
Rent is the payment received by resource owners for the use of their natural resources
a. True b. False
A perfectly inelastic demand curve is: a. parallel to the horizontal axis
b. parallel to the vertical axis. c. downward sloping with a slope of 45 degrees. d. U-shaped with the minimum value equal to zero.
If the MPC is 5/6 then the multiplier is
a. 6/5, so a $200 increase in government spending increases aggregate demand by $240. b. 5, so a $200 increase in government spending increases aggregate supply by $1000. c. 6, so a $200 increase in government spending increases aggregate demand by $1200. d. 6/5, so a $200 increase in government spending increases aggregate supply by $1200.