The benefit (or satisfaction) that an individual expects to derive from an activity is called
a. opportunity cost.
b. utility.
c. marginal cost.
d. scarcity.
B
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Everything else held constant, a depreciation of the domestic currency will cause the IS curve to shift to the ________ and aggregate demand will ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
The graph above shows a small country that can import at the world price of Pw and currently imports (Qd-Qs). Suppose that the government imposes quota of 80% of the current import amount (and suppose that this does not raise the domestic price so much that there will be no trade). Use the graph above to illustrate the effects of the quota. Show the new areas of consumer surplus, producer
surplus, and any other relevant areas, and the deadweight losses due to the quota. Who wins and who loses from the tariff? What will be an ideal response?