What is meant by world price of a good? How do the domestic price and the world price of a good together determine whether a country will be an importer or exporter of a certain good?
What will be an ideal response?
The world price of a good is the prevailing price of the good in the world market. The domestic price and the world price of a good play an important role in determining whether a country will export the good or import the good. If the domestic price of a good in a country is lower than the world price of the good, the country should export the good. On the contrary, if the domestic price of a good is higher than the world price of the good, the country should import the good.
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Suppose a monopsonist finds that the market price of its output has doubled, and to increase production to the new profit-maximizing level it has to double the wage to get more workers. How much, if any, does the return to monopsony power change? a. It increases by the number of new workers needed. b. It increases by the difference between the new wage and the old wage, multiplied by the number
of workers. c. It decreases by the difference between the new wage and the old wage, multiplied by the number of workers. d. It increases, but we cannot say by how much. e. It doubles.
An excise tax is a tax on a specific good, like gasoline
a. True b. False Indicate whether the statement is true or false
When the price of hot dogs is $1.50 each, 500 hot dogs are sold every day. After the price falls to $1.35 each, 510 hot dogs are sold every day. At the original price, what is the price elasticity of demand for hot dogs?
A. 0.2 B. 2 C. 5 D. 66.67
Describe the fiscal policy remedies that a Keynesian economist might prescribe to close a recessionary gap. How might the issue of crowding out impact the effectiveness of these policies?