Which of these would NOT be a factor that would permit the existence of monopoly power?
A. High levels of sunk costs
B. Control of a scarce resource
C. Diseconomies of scale in the production of the product
D. All of these responses are correct
Answer: C
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If the government imposes an effective ________, output decreases and ________ increases
A) price support; consumer surplus B) price floor; consumer surplus C) price support; total revenue D) price floor; marginal benefit to consumers E) price ceiling; efficiency
When British soldiers in German prisoner of war camps during World War I smoked the best cigarettes and used the low-quality ones as money, they were obeying
a. Gresham's law that says bad money drives out good money b. Gresham's law that says good money drives out bad money c. the classical law that says bad money drives out good money d. the classical law that says velocity affects money e. Weldon's law that says velocity affects money
Which of the following most accurately states the economic significance of exchange?
a. Physical goods have value because they exist; exchange can neither increase nor decrease their value. b. Production of physical goods creates value; exchange merely redistributes this value. c. Exchange creates value by moving goods from parties who value them less to parties who value them more. d. Exchange reduces value since it consumes resources without adding to the physical supply of goods.
The Keynesian short-run aggregate supply curve is horizontal because
A. it represents the full employment level of real GDP. B. it represents Say's law. C. it reflects wage and price inflexibility. D. it reflects the absence of money illusion.