A monopolist faces the inverse demand curve P = 60 - Q. It has variable costs of Q2 so that its marginal costs are 2Q, and it has fixed costs of 30
If a governmental agency imposes an $8 per unit specific tax on output, the deadweight loss from both the monopoly and the tax is A) $37.50.
B) $73.00
C) $526.50.
D) $562.50.
B
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Assume that seigniorage and the government's primary deficit are both zero
If the real interest rate is less than the growth rate of real GDP, fiscal policy ________, and if the real interest rate is greater than the growth rate of real GDP, fiscal policy ________. A) is sustainable; may be sustainable B) is unsustainable; is sustainable C) is sustainable; is unsustainable D) is unsustainable; may be sustainable
A fall in the price of farm land and farm prices in the early 1980s caused
a. farmers to borrow more heavily on that land to plant crops b. banks that had lent heavily to farmers to go bankrupt when the farmers were unable to repay their loans c. banks that had lent heavily to farmers to earn extraordinary profit when farmers repaid loans faster than usual d. banks to increase their loans to farmers until the price of farm land increased e. banks and farmers to get together to renegotiate their loans until the price of land and goods increased