When would a tax be efficient?
What will be an ideal response?
A tax is efficient, that is, creates no deadweight loss, when demand is perfectly inelastic or supply is perfectly inelastic. In both these cases a tax does not change the quantity produced and so creates no deadweight loss.
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Usury laws are often politically popular because
a. few people sympathize with banks and other lenders who are suspected of price gouging. b. consumers are in favor of the lower lending rates. c. those concerned with affordable housing for the poor favor ceilings on mortgage rates. d. All of the above are correct.
An increase in the proportion of the population that is unemployed above the normal rate is best represented in Figure 1.3 and using PP1 by a movement from point
A. C to point D. B. C to point A. C. D to point C. D. E to point D.