A patent gives a firm a monopoly in the production of the patented good. While monopoly profits provide an incentive for firms to innovate, the monopoly power imposes a cost on consumers. Why do consumers bear a cost from that monopoly? Is the cost to consumers greater than the profits earned by the monopolist?
Consumers bear a cost because monopolists produce less output and charge a higher price than in a competitive industry. There is a resulting loss of consumer surplus. However, only part of this loss is transferred to the monopolist in the form of profit.
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In a committee, any outcome preferred by any member can win
a. True b. False
The only variable that can affect a movement along the demand curve is
A) income levels. B) the price of the good itself. C) the number of buyers. D) the number of substitutes.
When economists speak of the demand for money, they refer to the amount of money people would like to hold
a. given that it can only be printed slowly b. in the best of all possible worlds c. in their bank accounts rather than their wallets d. at each interest rate e. rather than spend
Which of the following is a positive effect of job search and the unemployment that often accompanies it?
a. It keeps wages and income levels low. b. It permits individuals to better match their skills and preferences with the requirements of a job. c. It reduces the wage gap between high skill workers and those with few skills. d. It creates political pressure for an increase in the minimum wage, which will reduce the rate of unemployment in the long run.