The domestic demand curve, domestic supply curve, and world supply curves for a good are given in the above figure. All the curves are linear. Initially, the country allows imports. Then imports are banned
Calculate how consumer and producer surplus change because of the ban. Is the country better off with the ban on imports? Why?
Consumer surplus before the ban equals .5 ? 75 ? 75 = $2812.5. Producer surplus before the ban equals .5 ? 25 ? 25 = $312.5. Total social welfare equals $3125. The consumer surplus after the ban equals .5 ? 50 ? 50 = $1250. Producer surplus equals .5 ? 50 ? 50 = $1250 after the ban. Total social welfare equals $2500. Consumer surplus has decreased by $1562.5 and producer surplus has increased by $937.5 because of the ban. Total social welfare has decreased by $635. The country is worse off because the total social welfare has decreased.
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How much of each dollar spent by a consumer ultimately becomes income to someone else?
A) less than one dollar B) It depends on how much the cost there is in the distribution channel that delivers the good from the manufacturer to the consumer. C) It depends on how much labor was needed to produce the good that the consumer buys. D) one dollar
Inflation can be started by
A) a decrease in aggregate supply or a decrease in aggregate demand. B) a decrease in aggregate supply or an increase in aggregate demand. C) an increase in aggregate supply or an increase in aggregate demand. D) an increase in aggregate supply or a decrease in aggregate demand. E) an increase in aggregate demand or an increase in potential GDP.
If the consumer price index (CPI) is 200 one year and 206 the next year, the annual rate of inflation as measured by the CPI is approximately _____
a. 103 percent b. 1 percent c. 6 percent d. 3 percent e. 206 percent
Between 1968 and 2008 the percentage share of income that went to the top quintile
A. fell substantially. B. fell somewhat. C. stayed about the same. D. rose substantially.