MSC 50 40 Quantity 100 160 a subsidizing production of the good by $10 per unit
ID: 1113420 • Letter: M
Question
MSC 50 40 Quantity 100 160 a subsidizing production of the good by $10 per unit mg tax of $10 per unit on the firm producing the good c. using a quota system to restrict production to 160 units. d. subsidizing production of the good by $5 per unit e. letting the private market operate freely 0. The figure given below shows a backward-bending labor supply curve for an individual. In the figure below, which of wage rate of $142 Exhibit 12.2 wage rete 20 10 Hours of labor/week 20 40 60 a. The income effect dominates the substitution effect. b. The substitution effect dominates the income effect. c. No labor is supplied. d·The income effect equals the substitution effect. e. The supply curve is horizontal. 7. Which of the following is an example of traditional public-goods legislation? a. Funding for cancer researchExplanation / Answer
6) At w = $14, the labour supply is positively sloped, here as the wage increase the labour supply increases, this implies that leisure is substituted for labour as price of labour that is wage is high. The substitution effect dominates the income effect. The correct option is (b)
7) The correct option is (a). The vaccination or any advancement in the treatment of cancer will be a public good also education or research is public good. All other may fall under public policy and not public good.
8) the correct option is c. The marginal social cost lies above the marginal private benefit at all points. At the markt equilibrium where the marginal cost equals the marginal benefit, the social marginal cost is above the marginal private cost and the marginal private benefit.
9) The correct option is (c). total welfare equals the Consumer surplus+ producer surplus+government revenue . Here the loss in consumer surplus is not transferred to Producer/ monopolist. This is essentially the deadweight loss.
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