Price Controls
A Tax is better than a Quota for the Government in what way?
What is tax revenue?
This market demonstrates both productive and allocative efficiency in the long run.
What is Perfect Competition?
This happens to the demand for mustard when hotdogs, a complement, experience an increase in price.
What is a decrease in demand?
If the Spending Multiplier is 4, then what is the MPC?
What is 0.75?
The US AD/AS graph is in long-run equilibrium, and the government decides to increase both spending and taxes by 10M. What is the change in Real GDP?
What is a 10M increase in real GDP?
The government wants to lower rent prices. What price controls could they implement?
What is a binding price ceiling/What is a per-unit subsidy?
An entity that faces the entire supply for a good or service is called what?
What is a monopsony?
She sells seashells by the seashore. So does the ocean. If the cross-price elasticity between their seashells is 1, are they substitutes or complements?
What are substitutes?
The US Current account was at 10M, but now US workers in Canada earn 2M more than they did before. What is the updated Capital and Financial account?
What is -12M?
What is an Unemployment Rate less than the Natural Rate of Unemployment?
Producing toilet paper involves the mass deforestation of wooded areas, destroying the natural habitat of numerous endangered species. What type of externality is incurred?
What is a negative production externality?
An increasing number of firms enters a Monopolistically Competative market. A change occurs in which of the following curves?
What is an increasingly elastic demand curve?
The price of corn, an input in the production of cornbread, increases. What happens to the price of cornbread?
What is an increase in the price of cornbread?
When Disposable Income increases by 60%, Consumer Spending increases by 12%. What is the Marginal Propensity to Save?
What is an MPS of 0.8?
An increasing number of workers in the Labor force become discouraged. What happens to the unemployment rate?
What is a decrease in the unemployment rate?
The market equilibrium for a good is causing a positive externality. What price control is suitable to incentivize production at the socially optimal quantiy?
What is a subsidy?
A Price Discriminating Monopoly has a Marginal Revenue curve equal to what other curve?
What is the Demand/Price curve?
The cross-price elasticity between the quantity of bowling pins and the price of bowling balls is -8. A 4% decrease in the price of bowling balls has this effect on bowling pins.
What is a 32% increase in the quantity of bowling pins?
If the Tax Multiplier is 4, then what is the MPC?
What is 0.8?
The Production Possibilities curve shifts outwards. What is the effect on the LRAS and the LRPC?
What is a rightward shift in the LRAS and no shift in the LRPC?
The government wants a monopoly to produce at the socially optimal quantity, but the monopoly would be making a loss. What price control would align the socially optimal quantity with the fair return price?
What is a lump sum subsidy?
The government imposes this price control on a Monopoly so they sell at the Fair Return price.
What is a subsidy/price ceiling?
If the demand for carrots is perfectly elastic and the supply of carrots is perfectly elastic, then can there be a single market equilibrium?
What is no?
In the base year, real and nominal GDP is 100 million. Exports decrease by 10 million with an MPC of 0.8, and the subsequent change in agregate demand results in this nominal GDP when the GDP deflator is 150.
What is 75 million?
In an Ample Reserves system, the Central Bank lowers the Interest on Reserves. What happens to the demand for money?
What is an increase in the demand for money?