A difference between a quota and a tariff is that
A) a tariff generates a higher price than does a quota.
B) a tariff generates a greater reduction in exports than does a quota.
C) a quota increases profits of domestic producers more than does a tariff.
D) the government collects revenue from a tariff but does not collect revenue from a quota.
D
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Your drink budget is entirely split between bottled water and fancy liqueurs, and your tastes are quasilinear in bottled water. In an attempt to get people to drink more water, the government introduces a subsidy that lowers the price of bottled water.
a. In a graph with bottled water on the horizontal and fancy liqueurs on the vertical axis, illustrate your before-subsidy budget and your optimal bundle A. b. As a result of the water subsidy, I notice you consume more fancy liqueur. Illustrate this in your graph using income and substitution effects. c. You and I are good friends, in part because I confided in you some time ago that I, too, have tastes that are quasilinear in water. (Nothing bonds like quasilinearity!) But, after the subsidy is introduced, you observe that I, unlike you, have reduced my consumption of fancy liqueurs. Your other friends claim that this is proof that our friendship is based on a fiction --- that I cannot possibly also have quasilinear tastes. Illustrate in a graph why your friends are wrong. d. If we both have quasilinear tastes, can you explain what the fundamental difference in our tastes is that accounts for the difference in behavior? What will be an ideal response?
An increase in the price level shifts the aggregate demand curve to the left
Indicate whether the statement is true or false
Which of the following contributed to the emergence of hyperinflation in Germany in the early 1920s?
A) payment of massive war reparations required by the Versailles Peace Treaty B) huge budget deficits financed by printing paper money C) decreased desire to hold money on the part of the German people D) All of the above
Which statement is false?
A. Short-run cost assumes a fixed capital size, while long-run cost includes all possible capital levels in determining cost. B. Short-run total cost can never be less than long-run total cost at any given output level. C. Short run ATC and long run ATC are never equal except at the minimum point on the long run ATC curve. D. Long-run marginal cost never intersects long-run average cost as long as increasing returns to scale are present.