Suppose milk and cereal are compliments and the demand for milk is Qdm = 40 - 6Pm - 2Pc, where Qdm stands for millions of gallons of milk demanded, Pm stands for the price of milk and Pc stands for the price of cereal. The supply of milk is Qsm = 6Pm - 8, where Qsm stands for millions of gallons of milk supplied. The demand and supply of cereal are Qdc = 90 - 5Pc - Pm and Qsc = 5Pc - 10, respectively, where Qdc stands for millions of boxes of cereal demanded and Qsc stands for millions of boxes of cereal supplied. Suppose the government imposes a $2.00 per gallon tax on milk. The new general equilibrium price of milk is:
A. $2.37.
B. $4.37.
C. $0.37.
D. $3.39.
D. $3.39.
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The main goal of the Fair Trade Commissions Act was to
A. limit mergers and price-fixing contracts. B. make deceptive practices illegal. C. limit competition among small firms. D. make restraint of trade illegal.
Industrialized countries typically ________ their floating exchange rates. Developing countries often ________ their floating exchange rates
A) manage; peg B) peg; manage C) allow markets to determine; fix D) fix; manage E) fix; allow markets to determine
If an increase in the price of good A does not change its quantity demanded, then the price elasticity of demand for good A is said to be: a. perfectly elastic
b. perfectly inelastic. c. elastic. d. inelastic.
With linear demand and supply curves in a market, suppose a tax of $0.20 per unit on a good creates a deadweight loss of $40 . If the tax is increased to $0.50 per unit, the deadweight loss from the new tax will be
a. $200. b. $250. c. $475. d. $625.