Refer to Figure 22.3 below. Suppose that the supply curve is constant at $10. Suppose further that the before-tax demand curve D B can be written as B = 20 - P/2, where B is the number of structures per year and P is the price.
(A) Insert $10 into before-tax demand equation, and solve for B, B 0 = 20 - 10/2. B 0 = 15.
(B) Insert $10 into after-tax demand equation, and solve for B, to get B = 20 - 10 = 10. To find
, put the quantity 10 into before-tax demand equation, and solve for P = 40 - 2B = 20.
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The term "currency drain" refers to an increase in currency held outside banks
Indicate whether the statement is true or false
When a market is in equilibrium,
a. producers earn profits b. the minimum possible price is achieved c. there is no incentive for consumers or producers to change their current behavior d. excess demand is less than excess supply e. the maximum possible price is achieved
An imperfectly competitive firm faces a demand curve that is:
A. downward-sloping. B. perfectly inelastic. C. more than perfectly elastic. D. perfectly elastic.
Adam and Becky both recently started new jobs. Both have determined that they should save 10 percent of their monthly income toward retirement. Adam's employer has no program established for payroll deduction, but he could easily set up automatic
withdrawals to go into a retirement fund. Becky's employer automatically directs 8 percent of the paycheck into a retirement fund, but the employee can change the percentage deducted. Behavioral economists would expect: A. Adam to save more as he would set up a 10 percent automatic withdrawal while Becky would stay at the default of 8 percent. B. Becky would save more, as both would tend to stay at the defaults provided by their employers. C. them both to save 10 percent eventually, as both had predetermined that that was the optimal amount to save. D. Becky to feel a greater sense of loss by seeing funds automatically withheld each month.