If a firm is currently in short-run equilibrium earning a profit, what impact will a lump-sum tax have on its production decision?
A) The firm will decrease output to earn a higher profit.
B) The firm will increase output but earn a lower profit.
C) The firm will not change output but earn a lower profit.
D) The firm will not change output and earn a higher profit.
C
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To enter a local cable television market, a firm needs a license from the city government. This is an example of
A) a natural monopoly. B) the government maintaining consistent standards in the broadcast industry. C) a government-imposed barrier. D) occupational licensing.
If a regulator forced a natural monopolist to set P = MC
A) the monopolist would earn economic profits. B) the monopolist would suffer economic losses. C) the monopolist would break even. D) the monopolist would earn monopolistic profits.
Social costs are:
A. network costs minus private costs. B. private costs plus external costs. C. those costs imposed without compensation on someone other than the person who caused them. D. external costs minus private costs.
Nondiscretionary fiscal policy
A. multiplies declines in aggregate demand. B. multiplies inflationary growth of aggregate demand. C. does not require any changes in legislation. D. includes government expenditures, taxes and monetary policy.