The current market price is above the equilibrium price. Which of the following is true? A....
The current market price is above the equilibrium price. Which of the following is true?
| A. |
There is pressure for the market price to increase due to competition among sellers. |
|
| B. |
There is pressure for the market price to decrease due to competition among buyers. |
|
| C. |
There is pressure for the market price to decrease due to competition among sellers. |
|
| D. |
There is pressure for the market price to increase due to competition among buyers. |
2)Draw a graph to show the deadweight loss when a country, previously has free trade, now applies tariffs on their imports. Please have clear notations and labels
3)Bonus questions (2 points) What do you think could be the main reasons why governments collect taxes?
Homework Answers
1) when the current market price is above the equilibrium price then there is competition among sellers because the quantity supplied is greater than quantity demanded. Competition among sellers leads to download pressure on the market price.
Therefore, option C is correct.
2) 
3) the main reasons as to why government collect taxes are:
- To finance the government Expenditure like Expenditure on infrastructure, social security, military Expenditure etc.
- Taxes are also an instrument of fiscal policy and used for stabilisation of the Economy. When the Economy faces Inflationary Gap, government increases its tax collection.
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Please help solve
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Please help solve
ry Cook In the market below, the original equilibrium price was p and equilibrium qu in the market and shifted the Supply line upward to s 1. In the diagram identify: The price the buyers pay after the tax The price the sellers receive after the tax tax revenue the government receives The new consumer surplus after the tax The new producer surplus after the tax The deadweight loss due to the tax The 2. Why does...
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I need help with these Mcq's please. Thank you
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