22. Inequality between countries is a. greater than inequality within countries

Question

22. Inequality between countries is a. greater than inequality within countries (that is, the Gini Ratio for the world as a whole is o. about the same as inequality within countries (that is, the Gini Ratio for the world as a whole is c. smaller than the inequality within countries (that is, the Gini Ratio for the world as a whole is d. all of the above. e. none of the above. larger than the Gini Ratios for most individual countries). about the same as the Gini Ratios for most individual countries). smaller than the Gini Ratios for most individual countries). 23. If the price of a good is above its equilibrium level, and i this situation has not been caused by a price control, we would expect that there will be shortages, and the shortages will cause the price to move toward its there will be surpluses, and the surpluses will cause the price to move toward its equilibrium nothing will change, i.e., the price will remain above the equilibrium price indefinitely. a. equilibrium level. b. level. c. d. all of the above are correct. The question cannot be answered on the basis of the information given. e· 24. The juzbloop industry is perfectly competitive. The firms in the industry are earning zero economic profits, and the consumers have $100 of consumer surplus. But then Mr. Snodgrass buys up all of the competitive firms, and establishes a monopoly in the juzbloop industry. The monopoly has economic profits of $20, and consumer surplus is reduced from $100 to $40. What is the deadweight loss associated with monopolization of the industry? a. $ 100 b. 60 c. 40 d. 20 c. $ 10 25. In an attempt to raise its revenues, Chez Bland decreases the price of its rutabagas. What does this imply about the belief's of the managers of Chez Bland, regarding the own-price elasticity of demand for its rutabagas? a. Demand is inelastic. b. Demand is unit elastic. c. Demand is elastic. d. All of the above. e. None of the above.

Explanation / Answer

22) a is correct

Distribution of wealth is less equitable between countries than it is within the country.

23) b is correct

When price is above equilibrium price supply is greater than demand which creates surplus. To remove surplus price is reduced to equilibrium price.

24) c is correct

Deadweight loss is the change in total surplus

= 100-(20+40) = 40

25) c is correct

Elastic demand implies that consumers are responsive to changes in price. When demand is elastic decrease in price increases quantity demanded by a higher proportion. This increases risk revenue.

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