From an economic perspective, price discrimination is desirable because
A) the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus.
B) it redistributes wealth from wealthy consumers to highly innovative firms.
C) it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation.
D) the increase in profits results in higher corporate tax revenues received by the government which could be used to subsidize consumption for low-income individuals.
C
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Consider a graph illustrating the upward sloping supply curve for coffee. What would you expect to happen if the government decided to levy a 75-cents per gallon subsidy on coffee?
a. There would be a movement up along the supply curve. b. There would be a movement down along the supply curve. c. The supply curve would shift to the left. d. The supply curve would shift to the right. e. None of the above.
The Federal Reserve finances its credit policy with
A) reserve deposits that private banks hold with the Fed. B) the insurance premiums collected by the FDIC. C) borrowing from the federal government. D) funding from the U.S. Treasury Department.