Suppose a government imposes an import tariff that is too large and exceeds the tax required to completely shut down foreign imports. What is the impact of this mistake on the market outcome?
A) The impact is the same as intended --- there are no imports and the domestic market clears at the domestic equilibrium price.
B) The domestic price rises above the domestic equilibrium price, which results in an excess supply.
C) The domestic and foreign prices rise and cause consumer surplus losses in exporting and importing regions.
D) The domestic price rises above the domestic equilibrium price, which results in an excess demand.
A
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Which of the following is not a criticism of monopolies?
a. They restrict output. b. They set price above the perfectly competitive level. c. They tend to be less innovative than firms in a competitive market. d. They exert a disproportionate amount of political influence. e. They reduce allocative efficiency through perfect price discrimination.
Business-class airline tickets cost much more than coach-class tickets because, compared to householders, businesspeople's demand for travel is
a. equally elastic b. unitary elastic c. more elastic d. less elastic e. not a factor in the cost of airline tickets
Which of the following tools and concepts is useful in the analysis of international trade?
a. total surplus b. domestic supply c. equilibrium price d. All of the above are correct.
Exhibit 1A-1 Straight line
As shown in Exhibit 1A-1, the slope of straight line AB:
A. decreases with increases in X. B. increases with increases in X. C. increases with decreases in X. D. remains constant with changes in X.