A subsidy on a product will generate more actual benefit for consumers (and less for producers) when
a. the supply of the product is relatively inelastic.
b. the supply of the product is relatively elastic.
c. the demand for the product is relatively elastic.
d. either a or c is true.
B
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If the _______ differ between two countries, this suggests the possibility for mutually advantageous trade.
A) opportunity costs B) marginal costs C) absolute costs D) fixed costs
Choose the letter of the diagram in Figure 3.1 that best describes the type of shift that would occur in each situation for the market listed on the left, ceteris paribus. Figure 3.1 Shifts of Supply and Demand Steel: the government introduces environmental restrictions on the dumping of wastes from producing steel.
A. A. B. B. C. C. D. D.
What happens when network externalities are present?
a. The usefulness of telecommunications equipment rises. b. The usefulness of networks diminishes with the number of consumers who enter them. c. The usefulness of a product increases with the number of consumers who use it. d. The usefulness of a product decreases as the number of products rises.
An argument in favor of free trade is that trade barriers prevent a nation from reaping the benefits of specialization.
Answer the following statement true (T) or false (F)