Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the surplus producers receive when an $8 per unit price floor is imposed on the market.
A. $3.
B. $1.
C. $5.
D. $2.
Answer: C
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A conclusion of the theory of rational expectations is that, in the short run, the impact of a correctly anticipated fiscal policy designed to decrease AD will:
a. result in no net change in AD once people's expectations adjustments have been accounted for b. shift AD in the opposite direction intended once people's expectations adjustments have been accounted for. c. decrease the price level. d. result in no change in the price level.
In advising Congress and the President on how much to increase defense spending in response to security concerns, economists would suggest that they evaluate the
A. average cost per citizen of defense versus its average benefit. B. median cost per citizen of defense versus its median benefit. C. total cost of defense versus its total benefit. D. marginal cost of each additional dollar spent on defense versus its marginal benefit.
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $13:
A. Lace Hardware Hardware's producer surplus would increase by $3. B. House Depot's producer surplus would increase by $4. C. Bob's Hardware's producer surplus would remain unchanged. D. All of these statements are true.
Why is the U.S. trade deficit almost always larger than the U.S. current account deficit?
What will be an ideal response?