Using supply and demand curve analysis, the triangular area below the equilibrium price and above the supply curve is:
A. ?consumer surplus.
B. ?producer surplus.
C. ? marginal cost.
D. ?deadweight loss. ?
Answer: B
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Refer to Sales Tax. After the tax is imposed, consumers' surplus is equal to
The following questions refer to the accompanying diagram which shows the effects of a sales tax imposed on consumers. The initial price and quantity are P0 and Q0, respectively. After the tax is imposed, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. area A + B.
b. area B.
c. area B + C.
d. area A + B + C + D + E.
Which of the following describes the infant industry argument for protectionism?
A) Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. B) Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. C) An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition. D) Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies.
Adverse selection is a problem associated with equity and debt contracts arising from
A) the lender's relative lack of information about the borrower's potential returns and risks of his investment activities. B) the lender's inability to legally require sufficient collateral to cover a 100% loss if the borrower defaults. C) the borrower's lack of incentive to seek a loan for highly risky investments. D) the lender's inability to restrict the borrower from changing his behavior once given a loan.
Germany and __________ are two major banking-oriented systems
A) the United Kingdom B) Japan C) France D) the United States