Financial intermediaries are able to exploit economies of scale since
A) the equipment or expertise necessary for one transaction can be applied to other transactions.
B) they have special licenses needed to perform financial transactions.
C) financial markets fail to do so.
D) they can reduce transactions cost, but not information costs.
A
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Suppose the inverse demand curve for good A is given by the equation P A = 10 - Q A /10, and the supply curve is perfectly elastic (horizontal) at $1. Good A is presently taxed at $2 per unit. Good B (which is independent of good A) has an inverse demand curve, P B = 5 - Q B /20, and is also perfectly elastic at $1. Good B is untaxed.
(A) How much tax revenue is collected and what is the excess burden of the $2 tax on A? (B) How much revenue is collected if the tax on good A is reduced to $1 per unit and good B is taxed at $1 per unit? (C) What is the total excess burden of taxing both goods at $1 per unit? (D) Which tax system is preferable from the point of view of economic efficiency?
The quantity theory of money states that if the velocity of money is stable or at least predictable, then: a. the quantity of money in circulation determines real GDP in the short run
b. the quantity of money in circulation determines aggregate spending. c. the quantity of money in circulation determines both real GDP and the price level in the long run. d. the quantity of money in circulation determines only the price level in the long run. e. the quantity of money in circulation determines the potential output in the long run.
Max has allocated $100 toward meats for his barbecue. His budget line and indifference map are shown in the above figure. If the price of burger increases, which of the following bundles are in Max's opportunity set?
A) b, d, e B) d, e C) a, b, c, d, e D) None of the labeled points are in Max's opportunity set.
Refer to the information provided in Figure 28.7 below to answer the question(s) that follow.
Figure 28.7Refer to Figure 28.7. The unemployment rate at U1
A. equals zero. B. equals the natural rate. C. is greater than the natural rate. D. is lower than the natural rate.