Discuss some of the reasons why monopoly power is considered undesirable
Some of the reasons are:
1 . High prices reduce the wealth of consumers.
2 . High prices lead to resource misallocation.
3 . Monopoly power creates an obstacle to efficiency and innovation.
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Of the following, who is harmed by a tariff?
A) domestic buyers of the good or service B) the overall domestic economy C) the foreign exporter of the good or service D) domestic producers of the good or service E) Both answers A and B are correct.
In July 2014, the CPI inflation rate was 0.3 percent while the core CPI inflation rate was 0.1 percent. The difference between these two measurements of inflation indicates
A) prices for food and fuel were increasing more rapidly than prices for other goods. B) prices for food and fuel were increasing less rapidly than prices for other goods. C) the underlying inflation rate was higher than the overall inflation rate. D) a negative underlying inflation rate.
The slope of a country's production possibility frontier is equal to ________ and the optimal production point is located where the slope is equal to ________
Assume that output of good Y is measured on the vertical axis, output of good X is measured on the horizontal axis, MPL is the marginal product of labor with a subscript indicating which good, P is the price of a good, and w is the wage rate. A) -MPLY/MPLX; -PX/PY B) -PX/PY; -MPLY/MPLX; C) -PX/w; -PY/w D) -MPLY/w; -MPLF/w E) -MPLX/MPLY; -PX/PY
Good X is a Giffen good. When the price of X increases, the consumer will consume
a. more X. b. the same amount of X. c. less X. d. more or less X depending on the size of the income effect relative to the size of the substitution effect.