Trade between two parties is beneficial because:
a. it ensures that the standard of living in the poorer country matches its trading partner eventually.
b. it enables each to consume a bundle of goods that it cannot produced domestically.
c. it has an immediate effect on an economy by increasing its production set.
d. it allows the economy of both trading partners to grow equally.
B
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Producer surplus is the
A) cost of the good summed over the quantity sold. B) demand for a good minus the supply summed over the quantity sold. C) price of a good minus the marginal cost of producing it summed over the quantity sold. D) marginal cost of producing it summed over the quantity sold.
In the medium run, a tax cut that causes an increase in the budget deficit will affect which of the following?
A) the level of output but not its composition B) both the level and composition of output C) only the composition of output D) only the price level E) none of the above