When plotted with the aggregate price level on the vertical axis and output on the horizontal axis, the aggregate demand curve
A. slopes upward.
B. slopes downward.
C. is vertical.
D. is horizontal.
Answer: B
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Which of the following outcomes is NOT a result of a tax imposed on sellers of gasoline?
A) Supply decreases, a deadweight loss is created, and the price rises. B) The market becomes less efficient and the government collects the tax revenue. C) Demand does not change, the price rises, and consumer surplus decreases. D) Demand decreases, the market becomes more efficient, and the price rises.
The table above describes the market for paper. The production of paper produces pollution. There are no external benefits. What amount of tax per ton of paper is necessary to produce the efficient quantity of paper?
A) $60 B) zero C) $40 D) $100
Regulating "natural monopolies" according to the "rate of return" criterion is likely to
a. increase the monopolist's incentive to minimize cost. b. increase output compared to the situation where the firm is unregulated. c. completely eliminate the "welfare loss" due to monopoly. d. do all of the above
There is concern that CFCs, a chemical by-product of refrigeration, are destroying Earth’s protective ozone layer, leaving us more vulnerable to cataracts and skin cancer. Suppose each air conditioner creates 10 pounds of CFCs. The demand and supply of air conditioners follow: Price (dollars) 400 350 300 250 200 Quantity demanded 10 12 14 16 18 Quantity supplied 18 16 14 12 10 What will be the free-market price and quantity, and what will be the price and quantity if the government forces suppliers to pay a $100 tax for each air conditioner produced?
What will be an ideal response?