Refer to Scenario 19.3 below to answer the question(s) that follow. SCENARIO 19.3: Suppose demand for widgets is given by the equation P = 20 - 0.5Q. Originally, the price of the good is $10 per unit. When a tax of $2 per unit is imposed, the price of the good rises to $12 per unit.Refer to Scenario 19.3. Prior to the imposition of the tax consumer surplus was ________ and after the tax was imposed consumer surplus was ________.
A. $100; $64
B. $64; $100
C. $200; $128
D. $50; $32
Answer: A
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A market equilibrium is only efficient if:
A. the consumer surplus and the producer surplus associated with a given transaction are equal. B. output is distributed equitably among consumers. C. consumer surplus and producer surplus are both zero. D. all relevant costs and benefits are reflected in the market supply and demand curves.
Technological progress should lead to
A) an outward (rightward) shift in the investment function. B) an unchanged investment function. C) a downward movement of the investment function. D) less saving.
Rationing when goods have suddenly become more scarce, by asking people to make sacrifices voluntarily for the sake of others, discriminates against people who are
A) considerate. B) poor. C) unethical. D) unwilling to sacrifice. E) wealthy.
If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has total reserves of
A) $16,000. B) $20,000. C) $26,000. D) $36,000.