An increase in demand and a decrease in supply will lead to an
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price and quantity.
C) an unambiguous increase in quantity, but the effect on price is indeterminate.
D) an unambiguous increase in price, but the effect on quantity is indeterminate.
D
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Figure 4-12
Refer to . The supply curve S and the demand curve D1 indicate initial conditions in the market for college textbooks. A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase, shifting the demand curve from D1 to D2. Which of the following is true for this subsidy given the information provided in the exhibit?
a.
Textbook buyers will receive an actual benefit of $10 from the subsidy, while textbook sellers will receive an actual benefit of $20 from the subsidy.
b.
Textbook buyers will receive an actual benefit of $20 from the subsidy, while textbook sellers will receive an actual benefit of $10 from the subsidy.
c.
Textbook buyers will receive the full $30 benefit from the subsidy.
d.
Textbook sellers will receive the full $30 benefit from the subsidy.
At tax rates higher than the tax rate that maximizes tax revenues along a Laffer curve
A. a reduction in tax rates increases tax revenues. B. a reduction in tax rates reduces tax revenues. C. an increase in tax rates increases tax revenues. D. any variation in tax rates has no effect on tax revenues.