The figure below shows the national market for mopeds in a small country. Dd and Sd are the domestic demand and supply curves of mopeds, respectively. Initially, the country's government has a tariff on imports of mopeds.
The figure below shows the marginal external benefit curve (MEB) of the country from the production of domestic mopeds.
What will be the impact on the national well-being if, instead of imposing a tariff of $50 per unit, the government provides a subsidy of $50 per unit to the domestic manufacturers
of mopeds?
A. The national welfare will decline by $5 million.
B. The national welfare will decline by $2.5 million.
C. The national welfare will increase by $10.75 million.
D. The national welfare will increase by $5 million.
Answer: D
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The characteristics that describe a perfectly competitive industry include
A) many firms selling an identical product. B) one firm selling to many buyers. C) many firms selling a slightly differentiated product. D) a few firms selling to many buyers. E) None of the above answers is correct.
Taxes on specific goods such as cigarettes, gasoline, and alcoholic beverages are called
a. sales taxes. b. excise taxes. c. social insurance taxes. d. consumption taxes.
Assume the demand for sugar decreases and the supply of sugar increases. Which of the following outcomes is certain to occur?
A. The equilibrium price of sugar will rise. B. The equilibrium quantity of sugar will rise. C. The equilibrium quantity of sugar will fall. D. The equilibrium price of sugar will fall.
Answer the following questions true (T) or false (F)
1. If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing. 2. A U-shaped long-run average cost curve implies that a firm experiences economies of scale at low levels of production and diseconomies of scale at high levels of production.