A binding price ceiling is presented graphically as a(n):
a. price at equilibrium.
b. price below equilibrium.
c. price above equilibrium.
d. inefficiently low quality of the good provided.
Ans: b. price below equilibrium.
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If the supply curve is perfectly inelastic and the demand curve is a downward sloping straight line, what is the effect of a consumer ad valorem tax on equilibrium price and quantity?
A) Price remains unchanged and quantity increases. B) Price decreases and quantity increases. C) Price decreases and quantity remains unchanged. D) Price and quantity decrease.
If a good gives rise to substantial external benefits to society that are associated with its production and/or consumption, then the good likely has too many resources devoted to its production
a. True b. False Indicate whether the statement is true or false
Refer to Scenario 9.8 below to answer the question(s) that follow. SCENARIO 9.8: Investors put up $1,040,000 to construct a building and purchase all equipment for a new gourmet cupcake bakery. The investors expect to earn a minimum return of 10 per cent on their investment. The bakery is open 52 weeks per year and sells 900 cupcakes per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The bakery charges $8 on average per cupcake.Refer to Scenario 9.8. Total revenue per week is
A. $6,000. B. $7,200. C. $8,100. D. $9,500.
Fractional reserve banking is the system that
A. limits banks' activities from crossing state lines. B. allows banks not to insure their deposits. C. allows banks to keep smaller reserves than their deposits. D. allows banks not to join the Federal Reserve System.