14. (Refer to Figure 4 above). In the market shown, deadweight loss is A. 520 8
ID: 1104744 • Letter: 1
Question
14. (Refer to Figure 4 above). In the market shown, deadweight loss is A. 520 8 $50 C.$100 D. 580 15. (Refer to Figure 4 above). In the market shown, tax revenue is A. $80 8.$200 C. $100 D. Ss0 16. When supply and demand both become more inelastic, deadweight loss tends to A. increase B. decrease 17. When supply and demand both become more inelastic, tax revenuet A increase B. decrease 18. Which of the following is not a source of comparative advantage? A. Differences in factor endowments B. Difference is political system C. Differences in technology D. Differences in climate 19. Canada's opportunity cost of producing tomatoes is 1.2; USA's opportunity cost of producing tomatoes is 1.1-which country has the comparative advantage in tomato production? A. Canada B. USA C. NeitherExplanation / Answer
16. b. decrease. As demand and supply become inelastic, curve tends to be more vertical and demand-supply become less responsive to price change and hence dead weight loss decreases.
17. a. Increase. Inelastic demand and supply curves are very steep and tax revenue increases in this case. Also, the burden of tax falls upon the sellers.
20. c. A. Consumer surplus is the area of a triangle whose base is equilibrium quantity and height is the difference between maximum willingness to pay and price. Tarde increased the price and hence consumer surplus decreased from A + B to A.
21. B. The world price of walnuts is higher than domestic price and so domestic demand is less tthan supply. Hence, country will export walnuts.
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