If the government pays a per-unit subsidy to the producer of a service, we would expect to see a(n)
I. increase in the quantity demanded.
II. decrease in the out-of-pocket price paid by consumers.
III. increase in the quantity supplied by producers.
A) I only
B) both I and II only
C) both II and III only
D) I, II, and III
Answer: D
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Mary plants a number of trees in her garden every week, which keeps her neighborhood cool. Which of the following is true?
A) The marginal social cost of planting a tree is lower than the marginal private cost of planting a tree. B) The marginal private benefit of planting a tree is higher than the marginal social benefit of planting a tree. C) There is an external benefit in planting a tree. D) There is a deadweight loss in planting trees.
You have a bond that you can redeem for $10,000 one year from now. The interest rate is 10 percent (0.10) per year. How much is the bond worth today?
a. $9,090.91 b. $10,000.00 c. $8,264.46 d. $9,523.81 e. $9,000.00