An export subsidy helps reduce the selling price of a product by allowing individual producers to charge less and still cover all of their production costs.
Answer the following statement true (T) or false (F)
True
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The expenditure multiplier leads to greater than one-for-one changes in output when autonomous expenditure changes because
A. changes in inventories signal producers to adjust the level of output. B. multiple deposits are generated when new reserves are produced through fractional reserve banking. C. the direct changes in expenditure change the income of households, which leads to additional changes in expenditure. D. autonomous expenditure supports more output than induced spending.
Are black markets for foreign currencies more likely to occur in countries with an overvalued currency or with an undervalued currency? Why?
What will be an ideal response?
If supply is perfectly elastic in a consumer goods market, a per unit tax will always be inefficient unless the market demand curve for consumers is perfectly inelastic.
Answer the following statement true (T) or false (F)
Refer to Table 10-3. The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lime Fizz Soda. The price of an ice cream cone is $2 and the price of Lime Fizz Soda is $1
Use this information to select the correct statement. A) If Lee has an unlimited budget he will maximize his utility by buying only Lime Fizz Soda. B) We cannot determine how many ice cream cones and cans of Lime Fizz Soda Lee will consume without knowing what his income is. C) To maximize his utility Lee should consume 1 ice cream cone and 5 cans of Lime Fizz Soda. D) We cannot determine how many ice cream cones and cans of Lime Fizz Soda will maximize Lee's utility because we are given only the marginal utility per dollar values. We also need to know the marginal utility for each quantity.