Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect.
Assuming equilibrium price P1, producer surplus is represented by areas
A. a + b.
B. a + c.
C. a + b + c + d.
D. c + d.
Answer: D
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The Laffer curve
A) initially slopes upward as increasing tax rates lead to increasing tax revenue but eventually will slope downward as increasing tax rates lead to decreasing tax revenue. B) slopes upward throughout its range since increasing tax rates will always lead to increases in tax revenue. C) is horizontal because tax revenue is independent of the rate of interest. D) slopes downward throughout its range since increasing tax rates will always lead to decreases in tax revenue.
Issuing marketable emission allowance permits to polluting firms will result in those firms polluting more than would be desired by the benevolent social planner
Indicate whether the statement is true or false
Which of following is not a condition that must be met for a cartel to maximize its joint profits?
A) Total output by the cartel must be allocated among the member firms such that the individual firm's marginal costs are equal. B) The cartel must produce the level of output at which its marginal revenues and marginal costs are equal. C) The cartel must be operating in the inelastic portion of its demand curve. D) Each member firm must employ the least-cost method of production.
A subsidy:
A. reduces the amount that buyers pay and increases the amount that sellers receive for a good. B. increases the amount that buyers pay and reduces the amount that sellers receive for a good. C. reduces both the amount that buyers pay and the amount sellers receive for a good. D. increases both the amount that buyers pay and the amount sellers receive for a good.