Suppose that the current equilibrium price of gasoline is $3.50 per gallon and that the government passes a law that requires the price to be no more than $3 per gallon. What will be the effects?
What will be an ideal response?
The fall in price from $3.50 to $3 causes quantity demanded to increase and quantity supplied to decrease, which implies a shortage. Some way must be found to ration the gasoline that is supplied. The government may provide people with coupons that are necessary to use to buy gasoline. Alternate ways to ration the gasoline are for gas station attendants to receive illegal payments or gifts, queuing, favoritism, or any number of other ways.
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In the United States, most workers
a. work for government of some sort. b. produce raw materials for manufacturing. c. work in agriculture and farming. d. produce services rather than goods.
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, if this economy were to open to trade, consumers would:
A. enjoy a net gain to surplus of DEFG. B. suffer a transfer of surplus to the producer of DEFG. C. experience deadweight loss of FG. D. suffer a net loss to surplus of DEFG.
Indians and Indian-Americans have played a pivotal role in powering Silicon Valley's digital revolution. The emigration of talented people from countries like India to countries like the United States is often called:
A. credentialism. B. the brain drain. C. Malthusianism. D. outsourcing.
Which of the following statements is TRUE of static tax analysis?
A. A government cannot change it tax revenues by changing the tax rate. B. A government receives lower tax revenues by raising the tax rate. C. A change in the tax rate can raise or lower tax revenues, depending on other factors. D. A government receives higher tax revenues by raising the tax rate.