The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government imposes a $2 per gallon tax to be collected from sellers, estimate the change in p, Q, and social welfare
What will be an ideal response?
The supply curve shifts vertically by $2. The price changes from $3 per gallon to $4 per gallon. Quantity falls from 1,000 gallons to 500 gallons. For the 500 gallons no longer produced, consumer surplus was $250 and producer surplus was $250. Producers and consumers also pay $1,000, but that represents a transfer to the government.
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Under the least squares assumptions (zero conditional mean for the error term, Xi and Yi being i.i.d., and Xi and ui having finite fourth moments), the OLS estimator for the slope and intercept
A) has an exact normal distribution for n > 15. B) is BLUE. C) has a normal distribution even in small samples. D) is unbiased.
The imposition of a payroll tax
A. Increases the net wage paid to employees. B. Shifts the labor supply curve to the left. C. Reduces the nominal cost of labor. D. Shifts the labor demand curve to the right.
The U.S. was the world's leading net creditor nation until
A. 1971. B. 1973. C. 1982. D. 1990.
The post hoc, ergo propter hoc fallacy is the belief that
A. what is true for the whole is necessarily true of the parts. B. what is true for a part is necessarily true for the whole. C. it is impossible to draw generalizations about cause and effect. D. if Event A happens before Event B happens, then Event A causes Event B to occur.