Suppose the market demand function for ice cream is Qd = 10 - 2P and the market supply function for ice cream is Qs = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The change in producer surplus due to the tax is:
A. $3.56 million.
B. $1.89 million.
C. $7.11 million.
D. $944,444.
D. $944,444.
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Explain the terms "paternalism" and "consumer sovereignty."
What will be an ideal response?
The slope of a demand curve is not used to measure the price elasticity of demand because
A) the slope of a linear demand curve is not constant. B) the measurement of slope is sensitive to the units chosen for price and quantity. C) the slope of a line cannot have a negative value. D) the slope of the demand curve does not tell us how much quantity changes as price changes.
Another way of stating that investment is independent of real disposable income is to say that it is
A) inversely related. B) directly related. C) complementary. D) autonomous.
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period and real GDP remain the same. b. The quantity of real loanable funds per time period rises, and real GDP remains the same. c. The quantity of real loanable funds per time period falls, and real GDP falls. d. The quantity of real loanable funds per time period falls, and real GDP rises. e. The quantity of real loanable funds per time period rises, and real GDP falls.