Refer to the figure below.
If a price ceiling were imposed at point G, the consumer surplus would be represented by the area ________.
A. BAEH
B. BJEH
C. JAE
D. GAEF
Answer: D
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Refer to Negative Externality. According to a Pigovian analysis of this externality, when a tax of $5 per unit is imposed on the firms in this industry, the external costs created by the firms' production will equal
The following questions refer to the accompanying diagram, which shows the effects of a negative externality created by an industry's production. The equilibrium quantity in the absence of any attempt to internalize the externality is QE, and the optimal quantity according to a Pigovian analysis is QO.
a. area C + D + E + G + H.
b. area C + D + G + H.
c. area C + G.
d. zero.
If the Fed's monetary policy reaction function does not change, then when inflation increases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.
A. increasing; increases; decreases B. decreasing; decreases; decreases C. increasing; decreases; decreases D. increasing; increases; increases
The natural unemployment rate increased significantly during the 1980s and the 1990s
Indicate whether the statement is true or false
The usual response of the banking system to new government regulations is
A) evasion through whatever means are necessary. B) strict compliance. C) an attempt to circumvent the regulations through financial innovation. D) bankruptcy.