Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $11:
A. total producer surplus would increase to $17.
B. total producer surplus would increase to $5.
C. total producer surplus would decrease to $1.
D. total producer surplus would decrease to $7.
Answer: B
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Consider the following methods of taxing a corporation's income:
a. A flat tax, as opposed to a progressive tax, is levied on corporate profits. b. A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits. The shareholder would then be required to include this amount as taxable income for her personal income tax. The corporation does not pay a tax. c. A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains. Which of the methods above would avoid double taxation? A) a, b, and c B) a and b only C) a and c only D) b and c only
Politicians often instruct households to spend in order to help the economy. This advice overlooks the fact that
a. increases in consumption will make it easier for households to deal with unanticipated future expenses. b. increases in consumption will provide more loanable funds for investment. c. you cannot have a strong economy if all or most households are spending just about everything they earn. d. consumer spending is less than two-thirds of GDP.
Which of the following is always a characteristic of the oligopoly market structure?
a. Easy, low-cost entry and exit. b. Few sellers. c. All sellers produce identical products. d. Many sellers, each small in size relative to the overall market.
Answer the following questions true (T) or false (F)
1. An argument in favor of the Federal Reserve adopting inflation targeting is that in the long run, the Fed can have an impact on inflation but not on real GDP. 2. A borrower defaults on a loan when he stops making payments on the loan. 3. The Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association were established by Congress in order to regulate banks that buy and sell mortgage-backed securities.