Use a graph to demonstrate why quotas are likely to cause increased deadweight losses over time
What will be an ideal response?
Over time, demand for most goods rises, as populations increase (as well as for other reasons). The graph should show an increase in demand, given a constant quota amount. Since the quota does not change, the effect of the quota will be to raise price even more than previously. This increases the size of the deadweight loss due to underconsumption of the good and increase the deadweight loss due to domestic overproduction.
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If the price of iPads falls while demand remains unchanged, then total consumer surplus will ____________.
Fill in the blank(s) with correct word.
If competitive firms experience a loss, over the long run there will be a(n)
a. increase in market supply to reduce the market price b. increase in market supply to increase the market price c. decrease in market supply to reduce the market price d. decrease in market supply to increase the market price
Refer to Table 4-13. The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion. The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units
What is the value of economic surplus in this market? A) $600 thousand B) $1,050 thousand C) $1,500 thousand D) $2,100 thousand
The law of one price states that identical products should sell for the same price everywhere as long as transactions costs are zero
Indicate whether the statement is true or false