Suppose that Christine values a baseball hat at $20, and Mark values one at $18 . The pretax price of a baseball hat is $14 . The government imposes a $5 tax on baseball hats, which raises the price to $19 . What is the deadweight loss from the tax?
Prior to the tax, consumer surplus was $10 -- $6 for Christine ($20-$14) and $4 for Mark ($18-$14). After the tax, consumer surplus shrinks to $1 -- $1 for Christine ($20-$19); Mark no longer buys a hat. Tax revenue increases by $5 (from Christine). Deadweight loss is $4 because $10-$1-$5=$4.
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The slope of the supply curve of reserves can be attributed to the fact that:
A) quantity supplied of reserves decreases with the federal funds rate. B) the supply of reserves is arbitrarily set by the World Bank. C) the Fed fixes the supply of reserves. D) quantity supplied of reserves increases with the federal funds rate.
The sustained expansion of production possibilities is called
A) opportunity cost of growth. B) production possibilities. C) economic growth. D) economic investment. E) production expansion.
Exhibit 6-1 Refer to Exhibit 6-1. Prices rose by approximately __________ percent from Year 1 to Year 5.
a. 10.6 b. 9.6 c. 14.3 d. 4.5
If a given production combination is efficient, then it must be:
A. below the production possibilities curve. B. on the production possibilities curve. C. above the production possibilities curve. D. either an attainable or unattainable point.