Answer the following statement(s) true (T) or false (F)
1. Patents have ambiguous welfare consequences because they both create monopoly power and promote inventive activity.
2. The competition among firms to acquire the rights to legal barriers to entry helps to reduce the welfare costs of monopoly.
3. Social gain is lowered when a monopoly begins to practice price discrimination.
4. When a simple profit-maximizing monopoly begins to practice second-degree price discrimination, both consumers and the monopoly will benefit.
5. Both first-degree price discrimination and the two-part tariff, when perfectly implemented, reduce consumers' surplus to zero.
1. False
2. False
3. False
4. True
5. True
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If bad drivers can usually avoid being ticketed by the police, then insurance companies will
A) use one's driving record as a signal. B) use one's driving record as a screening device. C) not be able to use one's driving record as a screening device. D) request driving records directly from the police and not from the individual applicant.
In the short run, a perfectly competitive firm's most profitable level of output is where:
a. total revenue minus total cost is at a maximum. b. marginal cost equals marginal revenue. c. Both of the above. d. Neither of the above.
Why is competition important? Do business firms operating in competitive markets have a strong incentive to serve the interests of consumers? Do business owners have to care about the interests of others if they are going to provide them with helpful products and services?
A restaurant hires cooks and waiters. Cooks earn $10 an hour; waiters earn $5 an hour. The manager, who wants to maximize the number of meals served given a fixed payroll of $45 per hour, expects the following from cooks and waiters: 
Given the above information, at the optimal choice, the last dollar spent on hiring waiters yielded
A. 16 additional meals. B. 6 additional meals. C. 60 additional meals. D. 80 additional meals. E. none of the above