Relative to the federal government, state and local governments spend a larger share of their funds on:
A. education.
B. health.
C. defense.
D. interest payments.
Answer: A
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A market with demand Q = 100 - 3P is currently in equilibrium with 40 units being sold. It follows that the current price elasticity of demand
a. is zero. b. is -1.5. c. is -6. d. cannot be calculated with the information given.
Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. The total consumer surplus for Lauren and Katy taken together equaled
A) $15. B) $10. C) $40. D) $20. E) $50.
As the demand for corn increases to provide input for ethanol production, what is expected to happen to the price elasticity of corn supply?
A) It will decrease. B) It will become zero. C) It will increase. D) It will not change.
Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:
a. cause foreign producers to be better off, because the price they charge is now higher by $1 per box. b. cause domestic producers to be worse off by $5 per box. c. make domestic consumers worse off as they would be paying $1 more than the domestic price. d. make domestic consumers pay $1 more than the free trade price, but still $1 less than the domestic price. e. cause domestic producers to be worse off by $10 per box.