Refer to the above table. How could the U.S. government justify its decision to offer a subsidy to a profitable and successful business?
What will be an ideal response?
It could point out that this $10 million pump-priming expenditure results in a profit of $110 million. If Boeing paid a marginal income tax of 20%, this would net the government $55 million, which is more than 5 times the original subsidy, so that the decision may be justified not only in terms of benefit/cost considerations, but even in terms of pure budgetary terms.
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Is it possible for the total market demand for a good at the prevailing price to be inelastic while the demand facing any one seller of the good is highly elastic?
A) No, because each seller's demand is a part of the total demand. B) No, because if this were the case the price would fall until the market demand became elastic. C) No, because if this were the case the price would rise until the market demand became elastic. D) Yes, and it's actually quite common.
During the turmoil in the market for subprime mortgages in 2007 and 2008, the Fed increased the volume of discount loans. The goal of the Fed was to
A) reduce unemployment. B) stimulate economic growth. C) reduce the rate of inflation. D) reassure financial markets and promote financial stability. E) reduce the current account deficit.
According to figure 1.1, the favorite explanation for continuing poverty in America was "lack of effort" by the poor
Indicate whether the statement is true or false
World-class models receive significant economic rents because
A) their talents and abilities are in fixed supply. B) there is a shortage of world-class models. C) there is a surplus of world-class models. D) there is no equilibrium quantity of world-class models.