The Volumetric Ethanol Excise Tax Credit (VEETC) is a tax credit (which acts like a subsidy) for registered ethanol-gasoline blenders. Qualified blenders receive $0.51 for each gallon of pure ethanol they blend into gasoline
What statement is TRUE? A) With a subsidy, the price paid by consumers will be lower than without a subsidy.
B) Without a subsidy, the quantity produced by blenders will be greater than the quantity demanded.
C) With a subsidy, the equilibrium quantity produced will be lower than without a subsidy.
D) With a subsidy, production will be efficient.
A
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Using the data in the above table
A) the variables quantity and price are positively related. B) the variables quantity and price are negatively related. C) the variables quantity and price are neither positively nor negatively related. D) an increase in price is likely to cause an increase in quantity.
In the 1980s, one of the most common sights in the socialist countries, such as the former Soviet Union and North Korea, were long lines for bread, sugar, and other necessities. These countries had price ceilings on these necessities
Some of the socialist nations, such as the former Soviet Union, have moved to a market economy by lifting the price ceilings, while others, such as North Korea, have retained their price ceilings. What prediction do you make about the presence (or absence) of long lines today in the former Soviet Union and North Korea? Explain your answer.