Which of the following is not one of the three basic situations in which regulation is imposed?
A. price fixing
B. natural monopoly
C. externalities
D. imperfect information
Answer: A
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Refer to the figure above. What is the total surplus before Barylia opens up to free trade?
A) $250 B) $325 C) $800 D) $1,125
The facts show that the political business cycle theory
A) does a good job of explaining monetary policy during presidential election years. B) is unable to explain monetary policy during presidential election years. C) doesn't generally support the political business cycle theory. D) explains monetary policy best during years in which the President is running for reelection.
Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What are Winston's economic profits?
A. $78,000 B. $142,000 C. $138,000 D. $150,000
Suppose there are two groups of consumers that a monopolist can identify, one with relatively price-inelastic demand (perhaps because they have higher income and thus are not price sensitive) and one with relatively price-elastic demand. Which of the following forms of price discrimination would increase profit relative to charging each group the same price?
a. Charging the group with the higher price elasticity a higher price, and charging the group with the lower price elasticity a lower price. b. Charging the group with the higher price elasticity a lower price, and charging the group with the lower price elasticity a higher price. c. Charging the group with the higher price elasticity a price equal to marginal cost, and charging the group with the lower price elasticity a higher price. d. Charging a uniform price to both the groups of consumers.