Does a subsidy to sellers affect the supply curve?
A. Yes, it shifts supply vertically downward by the amount of the subsidy.
B. Yes, it shifts supply to the right by the amount of the subsidy.
C. No, the quantity supplied will increase, but the supply curve does not move.
D. No, the quantity supplied will decrease, but the supply curve does not move.
A. Yes, it shifts supply vertically downward by the amount of the subsidy.
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A firm is considering entering a market where demand for its product is Q = 100 - P. This demand function implies that the firm’s marginal revenue function is MR = 100 - 2Q. The firm’s total cost of producing the product for that market is TC = 500 + 10Q + Q2 which indicates that its marginal cost function is MC = 10 + Q. Indicate whether or not the firm should enter the market by calculating the firm’s profit (Hint: to find the price that the firm should charge, take the profit maximizing quantity and plug it into the demand equation). Describe how your previous answer would change if the firm’s total cost function became TC = 1000 + 10Q + Q2.
What will be an ideal response?
When a market is efficient, the
A) sum of consumer surplus and producer surplus is maximized. B) deadweight gain is maximized. C) quantity produced is maximized. D) marginal benefit of the last unit produced exceeds the marginal cost by as much as possible. E) total benefit equals the total cost.
Net exports of goods and services increase when
A) exports of goods and services decrease and imports of goods and services do not change. B) consumption expenditure increases. C) exports of goods and services increase and imports of goods and services do not change. D) consumption expenditure decreases. E) imports of goods and services increase and exports of goods and services do not change.
The closer an income Lorenz curve is to the line of equality, the
A) slower income is growing. B) more equally income is distributed. C) less equally income is distributed. D) faster income is growing.