(Consider This) Subsidies for mohair production illustrate:
A. why special-interest effects are often characterized by concentrated benefits and diffuse
costs.
B. why special-interest effects are often characterized by concentrated costs and diffuse
benefits.
C. that larger groups carry greater political weight than smaller groups.
D. the moral hazard problem.
Answer: A
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Refer to the figure above. What is the producer surplus after Lithasia opens up to free trade?
A) $2 B) $3 C) $6 D) $9
Suppose the current exchange rate between the euro and the United States dollar is 1.15 euros per dollar. If interest rates in the United States increase and interest rates in Europe remain unchanged then
A) the demand for dollars will increase. B) the demand for dollars will decrease. C) the demand for euros will increase. D) None of the above answers is correct.