If consumer tastes are quasilinear -- and ignoring the possibility of corner solutions and violations of the conditions of the first welfare theorem, the competitive market production level of the quasilinear good will be the same as that chosen by a social planner whose goal includes (but is not necessarily limited to) efficiency.
Answer the following statement true (T) or false (F)
True
Rationale: Regardless of how income is redistributed, the overall quantity of the quasilinear good that is demand remains the same and can be measured along a demand curve that arises from the decisions of a representative consumer with quasilinear tastes. Thus, the market demand curve is the same as the aggregate MWTP curve and does not change as income is redistributed. So, even if the social planner wishes to redistribute income for equity reasons, efficiency will always dictate the same level of output in the quasilinear market.
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Fast Stop, a gasoline and grocery quick mart, charges $2 for a 20 ounce fountain drink and $3 for a 40 ounce fountain drink. This is an example of ________.
A) second-degree price discrimination B) an all-or-nothing offer C) two-part pricing D) third-degree price discrimination
If a firm in a perfectly competitive market faces a market price of $8, and it decides to increase its production from 300 units to 550 units, the firm's total revenue will:
A. increase from $2,400 to $4,400. B. decrease from $4,400 to $2,400. C. stay the same at $8. D. likely rise, but it cannot be determined by how much.
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, what is the world price?
A. $45 B. $11 C. $23 D. $16
A new firm successfully enters a three-firm Cournot oligopoly without changing the demand and cost structures. The new price becomes:
A. unknown for lack of other information. B. 50 percent of the original price. C. 75 percent of the original price. D. the same as the original price.