Suppose Hillary values a large order of French fries at $4 . Bill values a large order of French fries at $7 . The pre-tax price of a large order of French fries is $2 . The government imposes a "fat tax" of $3 on each large order of French fries, and the price rises to $5 . The deadweight loss from the tax is
a. $4, and the deadweight loss comes from both Hillary and Bill.
b. $4, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax.
c. $2, and the deadweight loss comes from both Hillary and Bill.
d. $2, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax.
d
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If a rent ceiling is set ________ the equilibrium price, the effect can result in a housing ________
A) below; surplus B) below; shortage C) above; shortage D) above; surplus E) equal to; surplus
Which of the following is a major macroeconomic goal?
a. Low prices b. Fair prices c. Pure competition d. Low unemployment e. High prices
Economist Jan Tinbergen developed a formula, called ______, to predict which nations would engage in bilateral trade.
a. the trade deficit equation b. the index of equality c. the Tinbergen ratio d. the gravity equation of trade
The major difficulty with using a tax on pollution instead of a fixed percentage reduction regulation is:
A. that it only works in theory. B. that it would cause prices to rise. C. that firms would not pay the tax. D. establishing the optimal size of the tax.