Refer to the graph shown. With an effective price ceiling at Pc, the effect is an implicit tax on:
A. consumers of area D and a subsidy to suppliers of that area.
B. suppliers of area C and a subsidy to consumers of that area.
C. suppliers of area D and a subsidy to consumers of that area.
D. consumers of area C and a subsidy to suppliers of that area.
Answer: B
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If Tom and Di specialize in producing the goods in which he and she have a comparative advantage and they exchange goods, then ________
A) each will produce a combination of goods that is within her/his production possibility frontier B) they will lose because they are no longer able to produce and consume both goods C) each will gain because each can consume a combination of goods that is outside her/his production possibility frontier D) one of them will gain and the other will lose
Ocean Spray is considered to be an oligopoly firm because, until the 1990s, it faced little competition in the market for fresh and frozen cranberries. Why?
A) Ocean Spray had a patent on the production of cranberries that gave the company the exclusive right to market its product for 20 years. The 20-year period ended in the 1990s. B) The federal government imposed a high tariff on cranberry imports. During the 1990s the tariff was eliminated, but Ocean Spray still controls about 80 percent of the cranberry market. C) Until the 1990s, Ocean Spray controlled almost the entire supply of cranberries. D) Ocean Spray was able to achieve significant economies of scale in the production of cranberries. Beginning in the 1990s, other firms finally achieved economies of scale as well, but Ocean Spray still controls about 80 percent of the cranberry market.
Suppose output is $35 billion, government purchases are $10 billion, desired consumption is $15 billion, and desired investment is $6 billion. Net foreign lending would be equal to
A) -$4 billion. B) -$2 billion. C) $2 billion. D) $4 billion.
The main reason that hyperinflation renders a currency worthless is that ________
A) the government cannot print money fast enough to keep up with the rising prices B) laws against raising prices are easily evaded C) reducing government expenditures is politically unpopular D) the government's "official" inflation rate is always a gross understatement E) as soon as inflation seems out of control, everyone knows that the currency will soon lose whatever value it has today