Which of the following is a similarity between a tax and a subsidy in a competitive market without any externalities?
a. Both result in deadweight loss
b. Both result in a decrease in demand.
c. Both result in an increase in price.
d. Both result in an increase in government revenue.
a
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The demand for a good is inelastic if, when its price rises,
A) the demand falls. B) the quantity demanded falls. C) the quantity demanded increases. D) total dollar expenditure on the good decreases. E) total dollar expenditure on the good increases.
Season ticket holders often purchase their tickets before a season begins. There is often a discount associated with season tickets. Why?
A) Buying season tickets entails risk, which consumers are willing to bear if they are compensated for doing so. B) Buying season tickets is a way of guaranteeing a supply of tickets for the secondary market. C) Selling season tickets entails greater transactions costs which team owners hope to avoid. D) Sports teams are local monopolies.
Suppose that last year you borrowed $100 at 5 percent interest to purchase a $100 pair of Nike cross-training shoes. This year you repaid the bank with interest. If the inflation rate was 10 percent last year, your purchase of the shoes would:
a. make you an inflation winner as you saved $5 on the shoes. b. make you an inflation loser as you paid $5 more than you should have for the shoes. c. not be affected at all by the inflation rate. d. be taxed according to COLA adjustments. e. make you an inflation loser because of bracket creep.
____ is the income actually available to the consumers that determines aggregate demand
a. Nominal income b. Net domestic product c. Income corrected for depreciation d. Disposable income