Suppose the market for grass seed can be expressed as
Demand: QD = 100 - 2p
Supply: QS = 3p
At the market equilibrium, calculate the price elasticities of supply and demand. Use these numbers to predict the change in price resulting from a specific tax.
At p = 20 Q = 60, e = -2 ? (20/60 ) = -0.67. n = 3 ? (20/60 ) = 1.
The change in price resulting from a specific tax = [n/(n - e)] ? tax = [1/1.67] ? tax = 0.6 ? tax.
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A) aggregate demand B) short-run aggregate supply C) the production function D) long-run aggregate supply
The goodness of the fit of a line is measured by the
A) R2 statistic. B) t-statistic. C) unbiased coefficient. D) standard error.
most frequently used monetary policy tool is
What will be an ideal response?
Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade. These examples are misleading because
A) in the real world, rich countries can take advantage of poor countries. B) they do not account for the reduction in wages that occurs in both countries as a result of trade. C) some individuals in both countries may be made worse off because of trade. D) trade restrictions are likely to be imposed as trade grows over time.