8. Nominal GDP is equal to:
A. current prices * base year output.
B. current prices * current output.
C. base prices * base year output.
D. base year prices * current output.
E. current output * base year prices.
9. What would happen in the market for electric cars if the government started to tax more
heavily the production of such cars and the price of gasoline went up?
A. The equilibrium price will go up and the equilibrium quantity will go up.
B. The equilibrium price will go down and the equilibrium quantity will be indeterminate.
C. The equilibrium price will be indeterminate and the equilibrium quantity will go up.
D. The equilibrium price will go up and equilibrium quantity will be indeterminate.
E. The equilibrium price will be indeterminate and the equilibrium quantity will go down.
10. Consider a market initially described by the following two equations: P = 2 + Q and P = 8.
Now, the government introduces a $1 tax for every unit of the product sold by a business in this
market. The amount of economic inefficiency, as measured by deadweight loss, created by this
tax is:
A. $0.
B. $0.50.
C. $1.
D. $5.
E. Impossible to calculate.
11. A drought in California (that produces 82% of the world's almonds) for the past year
increases the cost of irrigation because each almond requires 1.1 gallons of water to produce. At
the same time, a new technology using micro sprinklers for irrigation and soil moisture
monitoring systems is devised in order to conserve water. What will happen in the market for
almonds with equilibrium price and quantity?
A. Both equilibrium price and quantity are ambiguous.
B. Equilibrium price increases and equilibrium quantity is ambiguous.
C. Equilibrium price is ambiguous and equilibrium quantity decreases.
D. Both equilibrium price and quantity are increasing.
E. Equilibrium price is ambiguous while equilibrium quantity increases.
