Explain the difference between a monopoly and a monopsony.
What will be an ideal response?
A monopoly market is a market in which only one firm produces a good and thus can have considerable market power. The monopolist faces a downward sloping demand curve and produces at the profit maximizing level where marginal revenue equals marginal cost. A monopsony market is a market in which there is only one buyer. The monopolist can have considerable market power with regards to how much is paid for the good. The monopolist has an upward sloping supply curve and thus can pay less for a good if it buys less. The profit maximizing quantity for the monopolist to purchase is where the marginal expenditure equals the marginal benefit. Both monopolies and monopolies can create social welfare losses, quantified as deadweight losses.
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The lawmaking time lag is best described as the time that it takes
A) Congress to realize that new laws must be passed to change taxes or spending. B) a newly passed law to become the norm in daily lives. C) the President to sign a bill sent from Congress. D) a jury to render a verdict. E) Congress to pass laws needed to change taxes or spending.
The disagreement value in a nonstrategic game is most closely associated with
a. opportunity costs b. fixed costs c. variable costs d. accounting costs
The demand curve for a monopolist:
A.) Is steeper than the marginal revenue curve. B.) Lies below the marginal revenue curve at every point but the first. C.) Is the same as the marginal revenue curve. D.) Lies above the marginal revenue curve at every point but the first.
Which of the following is the most important protection against fears of bank collapse?
A. the Federal Reserve B. the Federal Reserve Open Market Committee C. the Federal Deposit Insurance Corporation D. the gold and silver that backs Federal Reserve notes