Suppose That the Garden Gnome Industry Was in Long-Run Equilibrium

question 20

Multiple Choice

Suppose that the garden gnome industry was in long-run equilibrium as described in Problem 1.On January 1, 1993, the cost of plaster and labor remained at $7 per gnome, gnome molds still cost $1,000, and the interest rate remained at 10%, but the government introduced a tax of $7 on every garden gnome sold.Then the equilibrium price of garden gnomes in 1993 would be

• A)$16.
• B)$9.20.
• C)$7.
• D)$14.
• E)$21.

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Definitions:

Type A Personality

Characterized by a constant feeling of working against the clock and a competitive, aggressive, and highly driven nature.

Type B Personality

A personality type characterized by a relaxed, patient, and easy-going nature, in contrast to the more intense and deadline-oriented Type A personality.

Irritable

Easily annoyed or angered, often displaying a tendency to be upset by minor disturbances or inconveniences.

Aerobic Exercise

Physical activity that relies on the oxygen to generate energy, improving cardiovascular conditioning.