Refer to the cost and demand data below for a pure monopolist. Suppose that this monopoly is subjected to a regulatory commission. If the commission seeks to achieve the most efficient allocation of resources for this industry, it should set the socially optimal price at:
A. P1
B. P2
C. P3
D. 0
B. P2
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A reduction in a country's saving rate will tend to cause which of the following in the long run?
A) an increase in labor productivity B) an increase in the standard of living C) a reduction in economic growth D) an increase in per capita real GDP
Rational ignorance occurs when
a. voters find the cost of understanding a specific issue is greater than the expected benefit b. legislation generates large benefits for a few people but imposes costs on many people c. the preferences of the median voter dominates public choices d. individuals or firms attempt to obtain favorable treatment from government officials e. people make public decisions based on emotion rather than a rational analysis
"If China and India continue their economic expansion, the world cannot provide enough raw materials without terrible shortages worldwide." Evaluate this statement
a. True, increased demand from developing countries will swamp the existing supply of resources. b. True, increased demand from China and India will lead to large shortages in the North America and Europe. c. False, the shortage will be limited to China and India. d. False, increasing scarcity will result in higher prices and the deployment of new technologies that increase the efficiency of production, and together these markets forces will help to balance demand and supply worldwide.
The 1990 deficit reduction legislation
A. contained no new taxes. B. increased excise tax rates. C. increased the personal income tax rates by 10%. D. contained no reductions in non-defense spending.