The Following Figure Shows the Demand Curve, D, and Supply

question 66

Multiple Choice

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2.

-Refer to the figure above.Which of the following methods is the best way to compensate the losers from opening Lithasia to international trade?

• A) The sellers in Lithasia could be taxed and the revenue could be used to compensate buyers.
• B) The buyers in Lithasia could be taxed and the revenue could be used to compensate sellers.
• C) Both buyers and sellers could be taxed and the revenue could be retained by the government.
• D) The sellers in Lithasia could sell the pens at a price above the equilibrium price in the domestic market.

Recognize the structured techniques used by groups to conduct business.

Identify the differences between task groups and treatment groups.

Understand the concept of groupthink and how it impacts decision making.

Understand the concept of stock price as the present value of future dividends.

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Definitions:

Property Taxes

Taxes paid by property owners, based on the value of their property, to fund public services and infrastructure.

Education

A process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits through various means such as teaching, training, storytelling, discussion, and directed research.

Regressive Tax

At the individual level, a tax whose average tax rate decreases as the taxpayer’s income increases. At the national level, a tax for which the average tax rate (= tax revenue/GDP) falls as GDP rises.

Income Tax Base

The total amount of income on which an individual or entity is required to pay income tax.