In the expanded circular flow diagram, the government supplies:
A. goods and services to the product market.
B. factors of production to the factor market.
C. goods and services to households.
D. factors of production to firms.
Answer: A
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A government wishing to maximize its tax revenues should
A) always assess the highest possible tax rate. B) always assess the lowest possible tax rate. C) determine the highest possible tax rate and then back it down by exactly 4 percentage points. D) push tax rates up to the point where revenues peak, but raise the tax rate no farther.
Suppose there are two firms, Boors and Cudweiser, each selling nonalcoholic beer. Suppose Boors and Cudweiser are not viewed as perfect substitutes but rather demand for Boors is QB = 5000 ? 1000PB + 100PC and demand for Cudweiser is QC = 3000 ? 1500PC + 100PB. For simplicity, assume zero marginal costs. Which is the more preferred beer?
a. Boor's b. Cudweiser c. they are equally preferred d. neither are preferred