Consider the hypothetical supply and demand of Kidneys.
Initially, kidneys are exchanged by donations only (price=0). If the government decides to legalize kidney sales and the market reaches equilibrium, then:
A. total surplus increases.
B. consumer surplus remains the same.
C. producer surplus remains the same.
D. a shortage of kidneys will arise.
A. total surplus increases.
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Suppose a firm has a variable cost function VC = 20Q with avoidable fixed cost of $50,000. What kind of firm is this?
A. This firm is a natural monopoly because as Q rises, AC falls. B. This firm is a natural monopoly because as Q rises, AC rises. C. This firm is a natural monopoly because as Q rises, VC falls. D. This firm is a natural monopoly because as Q rises, VC rises.
A sudden increase in the market demand in a competitive industry leads to
a. Losses in the short-run and average profits in the long-run b. Above average profits in the short-run and average profits in the long-run c. New firms being attracted to the industry d. Both B&C
If the Federal Reserve Banks goal was to use open market operations to contract the economy it could move from:
A. MS1 to MS3
B. MS3 to MS4
C. MS4 to MS3
D. MS2 to MS3
Which of the following is an example of a monetary policy?
a. Feds reducing bank lending b. Government decreasing the tax rate c. Government increasing the level of technology d. Decreasing government spending