A Pigouvian subsidy
a. cannot achieve an efficient outcome
b. is a per-unit payment on a good that is set equal to the marginal external benefit at QE
c. achieves efficiency as long as it is set equal to the MEC at the competitive output level
d. lowers the MPB vertically by the amount of the subsidy
b. is a per-unit payment on a good that is set equal to the marginal external benefit at QE
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What is meant by tax incidence? Is the entire burden of the tax always borne by those on whom it is imposed?
What will be an ideal response?
Refer to Figure 15-15. The firm would maximize profit by producing
A) Q1 units. B) Q2 units. C) Q3 units. D) Q4 units.
If purchasing power parity holds, then if the price of a basket of goods in the U.S. rose from $1,500 to $2,000 and the price of the same basket in Mexico rose from 12,000 pesos to 18,000 pesos
a. inflation was higher in the U.S. than Mexico so the U.S. dollar would appreciate. b. inflation was higher in the U.S. than Mexico so the U.S.dollar would depreciate. c. inflation was lower in the U.S. than Mexico so the U.S. dollar would appreciate. d. inflation was lower in the U.S. than Mexico so the U.S dollar would depreciate.
Which of the following examples shows a shortage?
a. At $50 per watch, a company produces 10,000 watches and sells the same amount. b. At $50 per watch, a company produces 10,000 watches and has a demand for 100 more. c. At $50 per watch, a company produces 5,000 watches and sells 4,998. d. At $50 per watch, a company produces 5,000 watches and sells 1,000.