The above figure shows the demand and supply curves in the market for milk. Currently, the market is in equilibrium
If the government imposes a $2 per gallon tax to be collected from sellers, calculate the dead weight loss associated with the tax, and explain why the dead weight loss occurs.
The deadweight loss equals .5 ? 2 ? 500 ? $500. The deadweight loss occurs because the tax lowers the output from the competitive level. At the output level that occurs with the tax, consumers value the last unit of output by more than it costs to produce that unit.
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Stocks and bonds issued in banking-oriented systems are rather __________ because they are traded __________
A) liquid; frequently B) liquid; infrequently if at all C) illiquid; frequently D) illiquid; infrequently if at all
The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their
a. transitory income for the year of the recession likely exceeds their permanent income. b. permanent income likely exceeds their transitory income for the year of the recession. c. permanent income will be more affected by the recession than their transitory income. d. Both a and c are correct.