people to save less money. How 8. Suppose that in a given country, the governmen
ID: 1141531 • Letter: P
Question
people to save less money. How 8. Suppose that in a given country, the government would like could they achieve this using a negative direct incentive A. Inform individuals that saving money reduces aggregate consumption and thus economic output, which may cause them to lose their jobs B. Inform consumers about all that they could buy with their money with the hope that they spend more. C. Impose a tax on individuals for saving their money D. Provide individuals with a financial benefit for spending money E. Provide funding for an advertising campaign encouraging people to spend more money 9. Consider the market for milk which is described by the following two equations: Q 900-100 P and Q 300 200 P. where Q represents milk quantity (in gallons) and P s price (in dollars per gallon). Assume that currently the price is $4 per gallon of milk. In the immediate future, holding everything else constant, in this market we expect to see A. No change. B. A decrease in demand. C. A decrease in price, in order to correct the surplus of milk. D. An increase in price, in order to correct the shortage of milk. E. An increase in supply. 10. Refer to the PPF model pictured above, Pareto efficiency occurs at: A. point A. B. point D. C. points A, B, C D. points C, E, D E. points B, C, EExplanation / Answer
8. direct incentives are those which are obvious and clear and negative incentives are something that motivate or enocourage people to do something out of fear or compulsion.
Hence here imposing a tax on saving is direct and also negative because its kind of compulsion.
Option C is correct.
9. At current price of $4
demand is Q = 900- 100(4) = 900-400=500
supply is Q = -300+ 200(4) = -300 + 800 = 500
As you see demand is equal to supply, there is neither shortage nor surplus henec nothing will happen in future because market is already in equilibrium.
A. No change is correct.
10. Pareto effieciny occurs at points which are on highest indifference curve. here there is only one indifference curve and points which lie on it are B,C and E.
Hence B , C and E are points where pareto efficeicy occurs.
Option E is correct.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.