Suppose that Steve and Susie each perceives $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will:
A. defeat this project and resources will be underallocated to it.
B. defeat this project and resources will be efficiently allocated.
C. pass this project and resources will be underallocated to it.
D. pass this project and resources will be overallocated to it.
Answer: A
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Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 . Use the midpoint formula to calculate the percentage change in price
What will be an ideal response?
The recent flexible exchange rate system developed because of: a. the controversies generated by trade surplus nations wanting to devalue their currencies
b. the huge debts owed to the IMF by less-developed countries. c. governments were unable to agree on an alternative to a fixed-rate approach when the Bretton Woods system collapsed. d. the controversies generated by trade deficit nations wanting to raise the value of their currencies.