"Private costs are borne by individuals while social costs are borne by society." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. Social costs are private costs plus external costs, and external costs are borne by people who are not part of the exchange. They are still borne by individuals though.
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If inflation is much higher than originally anticipated, _____ are better off and _____ are worse off
a. lenders who extended loans at fixed interest rates; people who borrowed at fixed interest rates b. people who borrowed at fixed interest rates; banks that extended loans at fixed interest rates c. retired people living on a fixed income; people who had borrowed fixed interest rate loans d. people who deposited their savings at fixed interest rates; banks that accepted deposits at fixed interest rates e. oil refiners who signed labor contracts agreeing to pay their workers the cost-of-living wage; workers who receive that cost-of-living wage
Assume the supply curve for diapers is a typical, upward-sloping straight line, and the demand curve for diapers is a typical, downward-sloping straight line. Suppose the equilibrium quantity in the market for diapers is 1,000 per month when there is no tax. Then a tax of $0.50 per diaper is imposed. The effective price paid by buyers increases from $1.50 to $1.90 and the effective price received
by sellers falls from $1.50 to $1.40 . The government's tax revenue amounts to $475 per month. Which of the following statements is correct? a. After the tax is imposed, the equilibrium quantity of diapers is 900 per month. b. The demand for diapers is more elastic than the supply of diapers. c. The deadweight loss of the tax is $12.50. d. The tax causes a decrease in consumer surplus of $380.