Refer to Excise Subsidy. The amount of the subsidy paid to firms is given by
The following questions refer to the accompanying diagram which shows the effects of an excise subsidy given to firms. The initial price and quantity are P0 and Q0, respectively. After the subsidy is granted, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. area A + B + E + H.
b. area B + C + D + E + F + G.
c. area D.
d. area F + G + I + J.
b. area B + C + D + E + F + G.
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Along a society's production possibilities frontier,
a. the level of technology is changing b. more of one good can be produced without giving up some of the other good c. resources are not being fully utilized d. available resources are being used efficiently e. there is productive inefficiency in the economy
The same year that Derek Jeter, one-time shortstop for the New York Yankees, received an annual salary of $23.2 million, the president of the United States received an annual salary of $400,000. Based on marginal productivity theory and assuming these markets are competitive, this salary differential indicates that:
A. the president of the United States contributed much more to society than did Derek Jeter. B. the salary differential between Derek Jeter and the president of the United States indicated that their marginal productivities cannot be compared. C. Derek Jeter contributed much more to society than did the president of the United States. D. Derek Jeter and the president of the United States made equal contributions to society.