Econ

If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

$2,500

Hilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned $3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Hilda's Hair Hysteria is

1.14

In recent years, which countries have taken a unilateral approach to the removal of trade restrictions?

Chile and South Korea

What is the difference between command-and-control policies and market-based policies toward externalities?

Command-and-control policies regulate behavior directly, whereas market-based policies provide incentives for private decisionmakers to change their behavior.

Which of the following statements is correct?

Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a lower cost.

Which of the following statements is correct? Corrective Taxes

Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a lower cost.

The nation of Farmland forbids international trade. In Farmland, you can exchange 1 pound of beef for 2 pounds of pepper. In other countries, you can exchange 1 pound of beef for 4 pounds of pepper. These facts indicate that

Farmland has a comparative advantage, relative to other countries, in producing beef.

To economists, good environmental policy begins by acknowledging one of the Ten Principles of Economics:

People face trade-offs.

Which of the following is the most accurate statement?

Protection is not necessary for an industry to grow.

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?

The allocation of kidneys would be fair.

Which of the following is not necessary in order for the corrective tax and pollution permit to have equivalent effects?

The amount of pollution emitted by each firm must be the same.

Suppose that beef producers create a negative externality. What is the relationship between the equilibrium quantity of beef and the socially optimal quantity of beef?

The equilibrium quantity is greater than the socially optimal quantity.

The rules established under GATT are enforced by the

World Trade Organization.

Dee loves to landscape her yard, but her neighbor Marvin places a low value on his landscaping. When Marvin's grass is neglected and gets long, Dee will mow it for Marvin. This is an example of

a private solution to a negative externality problem.

Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

between $5 and $7

Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

between $7 and $10

Which of the following require firms to pay to pollute? (i) corrective taxes (ii) tradable pollution permits (iii) pollution regulations

both (i) and (ii)

A decrease in supply will cause the smallest increase in price when

both supply and demand are elastic.

When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country

cannot affect world prices by trading with other countries.

Economists view the fact that Florida grows oranges, Texas pumps oil, and California makes wine as

confirmation of the virtues of free trade.

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

decrease consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.

Both tariffs and import quotas

decrease the quantity of imports and raise the domestic price of the good.

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free-trade policy has

decreased consumer surplus in the steel market and increased total surplus in the incense market.

The quantity sold in a market will increase if the government

decreases a binding price floor in that market

When the government reduces my income tax by $0.30 for every $1.00 that I contribute to a charity, the government is effectively

encouraging a private solution to a positive-externality problem.

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.

Refer to Figure 6-29. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2, the price paid by buyers will be

higher in the long run than in the short run.

President Bush imposed temporary tariffs on imported steel in 2002. The reasons for this trade restriction is most consistent with the

infant-industry argument.

The infant-industry argument

is based on the belief that protecting industries when they are young will pay off later.

Pollution is a

negative externality that can be viewed as a common-resource problem.

The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack. Therefore, the market for smokestack scrubbers is shown in

negative externality, optimal is to the left of the equlibrium

The North American Free Trade Agreement

reduced trade restrictions among Canada, Mexico and the United States.

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20.

The overuse of a common resource relative to its economically efficient use is called

the Tragedy of the Commons.

In a December 2007 New York Times column, Paul Krugman noted that

the United States now imports more oil and other raw materials from other advanced countries than from the third world.

According to the Coase theorem, private parties can solve the problem of externalities if

the cost of bargaining is small.

Some environmentalists argue that we should protect the environment as much as possible, regardless of cost. Which of the following is not a likely outcome of pursuing such a course of action?

the elimination of all pollution

Which of the following magnitudes is constant over all units of output?

the external benefit of the last unit of output that was produced and sold

Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality,

the market equilibrium quantity will not be the socially optimal quantity.

When a free-rider problem exists,

the market will devote too few resources to the production of the good.

When a nation first begins to trade with other countries and the nation becomes an importer of corn,

the nation's consumers of corn become better off and the nation's producers of corn become worse off.