In: Economics
14.When supply and demand are linear curves, the incidence of the tax is always split equally between producers and consumers.
A.True
B.False
15.Valuing the loss of a non-market good due to pollution requires methods of imputing the marginal willingness to pay for damage reduction/environmental quality improvement because market prices do not exist.
A.False
B.True
16.An environmental program is ________ if the net effect of that policy has proportionally ________ effect on low-income people as on high-income people.
A.progressive; less
B.progressive; greater
C.regressive; greater
D.progressive; the same
17. The ________ is a weighted average equal to the sum over all possible events of each outcome times the ________ of each outcome.
A.present value; discount factor
B.expected value; probability of occurrence
C.present value; probability of occurrence
D.expected value; discount factor
19.If the inverse demand curve is: P = 50 - 2QD, the consumer surplus at 10 units of consumption is _______.
A.$100
B.$220
C.$30
D.$140
14) False..
(The incidence of the tax is depends upon the elasticity of the supply and demand curve)..
15) True..
(Valuing the loss of a non-market good due to pollution requires methods of imputing the marginal willingness to pay for damage reduction/environmental quality improvement because market prices do not exist)..
16) Progressive; greater..
(An environmental program is progressive if the net effect of that policy has proportionally greater effect on low-income people as on high-income people)..
17) expected value; probability of occurrence..
(the expected value is calculated by multiplying each of the possible outcomes by the probability of each outcome)..
19) Consumer surplus = ∫q0 f(q)dq−pq
(where q=10, f(q)=50-2q, p= 50-2*10= 50-20 =30)..
Now, integration f(q)dq = integration (50-2q)dq = 50q- q^2
= 50*10-10^2 (using upper limit 10 and lower limit 0)
=500-100 =400..
So, Consumer surplus = 400-pq =400-30*10 =400-300 =$100..
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