Which of the following is NOT a reason people tolerate tariffs and quotas?
A) Their jobs depend on tariffs and quotas.
B) Costs may be hidden and hard to quantify.
C) Costs of the policy are spread over a large number of people.
D) The marginal expenses to fight the protection outweigh the personal marginal costs of the protection.
A
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Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. If in the short run the number of firms is fixed and their fixed costs are sunk, what is the short run equilibrium price?
A. $20 per unit B. $24 per unit C. $10 per unit D. $40 per unit
Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples. Which of the following exchange rates between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?
a. 1 ton of oranges for 1/3 of a ton of oranges b. 1 ton of apples for 3 1/3 tons of oranges c. 1 ton of apples for 2 tons of oranges d. 1 ton of oranges for 0.4 tons of apples
An increase in supply is graphically represented by a leftward shift of the supply curve
Indicate whether the statement is true or false
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.