The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal. How much would the government have to pay farmers?
A. $1.5 billion
B. $3 billion
C. $4.5 billion
D. $18 billion
C. $4.5 billion
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Use the following figure to answer the next question.
A shift from AD1 shifts to AD2 would be consistent with what economic event in U.S. history?
A. demand-pull inflation in the late 1960s B. recession in 2007-09 C. cost-push inflation in the mid-1970s D. full-employment in the late 1990s
Entrepreneurs bring together the factors of production to produce goods and services
Indicate whether the statement is true or false
What effect would economic weakness in Europe due to a sovereign debt crisis have on the U.S. economy?
A) IS shifts to the right B) IS shifts to the left C) potential GDP increases D) potential GDP decreases
If the production of ukuleles creates a negative externality that is not corrected for by the government, the equilibrium quantity of ukuleles is
A) higher than optimal. B) lower than optimal. C) efficient. D) at a optimal level.