A lighthouse might be considered a private good if
a. there is a second lighthouse nearby, thus preventing a monopoly.
b. the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse.
c. ships are able to enjoy the benefits of the lighthouse without paying for the benefit.
d. a nearby port authority is able to avoid paying any fees to the lighthouse owner.
b
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If the firm in Figure 17-4 above maintains its set price of P0, rather than dropping price to P1, the loss of consumer surplus due to this decision is
A) J + K. B) K - G. C) G + H. D) H + K.
Consider two Cournot competitors selling complementary goods with demand curves given by:
p1 = 100 - q1 + .5q2 p2 = 100 - q2 + .5q1 Suppose each firm has a marginal and average cost of $10. a. What about the demand equations indicate that these goods are complements? How do they differ from the standard Cournot model? b. Find the equilibrium prices and quantities. c. Suppose the two firms merge. By doing so, the newly merged firm will act to maximize the joint profits ((q1,q2 ) = 1(q1,q2 ) + 2(q1,q2 )). Find the joint-profit maximizing price and quantities. d. Are the combined profits greater or smaller from merging? That is, is merging profitable for the firms? e. Are consumers better or worse off with the firms merging? How does this compare to the mergers of Cournot competitors selling substitutes? What does this imply about antitrust policy towards mergers of firms selling complementary goods (such as airplanes and engines, computers and processors, cars and tire companies, etc).
If both of two goods have price elasticities of demand, price elasticities of supply, income elasticities of demand and cross elasticities of demand all equal to 2.0: a. They are both normal and substitutes
b. They are both normal and complements. c. They are both inferior and substitutes. d. They are both inferior and complements.
The most volatile component of aggregate demand is:
a. consumer spending b. government purchases c. net exports d. investment spending