Suppose the government decides to eliminate some, but not all, of the rules that govern how investment banks conduct their business. This would be an example of
A. central planning.
B. economic competition.
C. deregulation.
D. a laissez-faire policy.
Answer: C
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Suppose tastes for consumption now and consumption in the future have constant elasticity of substitution. It may then be the case that a tax on interest income is efficient even if savings fall in response to the tax.
Answer the following statement true (T) or false (F)
A positive externality exists and government wants to impose a subsidy in order to bring about an efficient outcome. To accomplish its objective, government must set the subsidy equal to marginal
A. private cost. B. social benefit. C. external cost. D. social cost. E. external benefit.
A decrease in both the equilibrium price and the equilibrium quantity of rice is best explained by:
A. an increase in the demand for rice. B. a decrease in the demand for rice. C. a decrease in the supply of rice. D. an increase in the supply of rice.
(Ref 8-7 Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. Given the information in the table, if these students can sell their Phantom tickets for only $5, then:
A. the total producer surplus for the five students will be $330.
B. Tim will be the only student not to sell his ticket.
C. the total producer surplus for the five students will be $4.
D. Whitney, Ralph, and Rick will sell their tickets.