Refer to Table 2-14. If the two countries specialize and trade, who should export motorcycles?
A) There is no basis for trade between the two countries.
B) They should both be importing motorcycles.
C) Scotland
D) Ireland
C
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If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set
A) equal to the marginal private cost of production at the economically efficient level of pollution. B) equal to the amount of the deadweight loss created in the absence of a pollution tax. C) at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product. D) equal to the marginal external cost at the economically efficient level of pollution.
Which of the following will make the real-world money multiplier smaller than the theoretical formula?
a. Banks actually hold fewer reserves than technically required by the Fed. b. Banks actually make loans for more money than they have in excess reserves. c. Banks may keep some excess reserves rather than loan it all out. d. Both a. and b. above are correct.
After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?
A. Price will increase, and quantity will decrease. B. Price will decrease, and quantity will decrease. C. Price will decrease, and quantity will increase. D. Price will increase, and quantity will increase.
The income of a consumer is $40, the price of A is $8, and the price of B is $4. If the quantity of A is measured vertically, then the slope of the budget line is:
A. 0.5 B. 1.0 C. 2.0 D. 2.5