________ is the ability to raise prices above the level that perfect competition would produce by restricting the quantity supplied.
A. Market power
B. Perfect marketing
C. Monopolistic power
D. Oligarchic power
Answer: A
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According to Pigovian analysis, competitive behavior will result in overproduction of a good when
a. firms' activities create external costs. b. people outside of market transactions benefit from those transactions. c. property rights have been clearly and unambiguously assigned. d. private and social marginal costs are identical.
An individual derives utility from consuming "all other goods," g, and clean air (measured by the reduction in particulate matter per m3), a, as measured by the utility function U(g,a) = g0.6a0.4
The price of consumer goods equals $20 and the price of clean air (abatement) equals $10. What is the slope of the Engel curve when income increases from $100 to $200? A) The slope is 25. B) The slope is -25. C) The slope is zero. D) The slope is infinite.
Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. If in the short run the number of firms is fixed and their fixed costs are sunk, how much does each of the active firms produce in the short run equilibrium?
A. 5 units B. 6 units C. 10 units D. 20 units
Suppose price increases from $9.00 to $11.00. Using the mid-point formula, the percentage change in price is:
A. 20% B. 25% C. 20% D. 2%