In the simple circular-flow diagram, who buys the factors of production?
a. households only
b. firms only
c. both households and firms
d. neither households nor firms
b
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Sammy has a drone that he values at $1,500. Dean values the same drone at $2,000. Sammy decides to sell the drone to Dean for $1,800. If the government imposes a $350 tax on the sale of drones,
A) Sammy and Dean would not be able to complete the transaction. B) Sammy and Dean would still be able to complete the transaction. C) the tax would cause a deadweight loss of $500. D) Both A and C are correct.
In the above figure, if the market is competitive and unregulated, the price will be
A) $20 per unit. B) $15 per unit. C) $10 per unit. D) $5 per unit.
Refer to Table 18-5. The tax system is
A) progressive throughout all levels of income. B) regressive between $20,000 and $25,000 of income and progressive between $32,000 and $42,000. C) regressive throughout all levels of income. D) proportional throughout all levels of income.
If a competitive firm is in short-run equilibrium, then
A) profits equal zero. B) it will not operate at a loss. C) an increase in its fixed cost will have no effect on profit. D) an increase in its fixed cost will have no effect on output.