The economic inefficiency of a monopolist can be measured by the
a. deadweight loss.
b. value of the unrealized trades that could be made if the monopolist produced the socially-efficient output.
c. area above marginal cost but beneath demand from the monopoly output to the socially-efficient output.
d. All of the above are correct.
d
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All of the following involve a moral hazard problem EXCEPT
A) an individual driving carelessly after buying a comprehensive insurance policy for a Ford Pinto. B) the IMF bailing Mexico out of a financial crisis, with promises to do the same for other nations that might face financial problems. C) making regular visits to your doctor because you know that you have full healthcare coverage. D) the requirement of banking institutions that owners invest a substantial portion of their own capital in their bank. E) membership in FDIC (Federal Deposit Insurance Corporation) by your local bank.
According to Keynes, if the economy is in a deep recession, an increase in aggregate demand will
A. increase real GDP without putting significant upward pressure on the price level. B. decrease real GDP. C. increase the price level with no effect on real GDP. D. increase both real GDP and the price level.
When the monopolist decides to supply a given amount to the market, it will:
A. set the price equal to marginal cost. B. set the price higher than what demanders are willing to pay for that amount. C. only sell that amount if it charges what the demanders are willing to pay for that amount. D. set the price lower than the demand curve to create a perceived shortage.
Which of the following is a correct statement about a mixed economy?
a. in a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources. b. in a mixed economy, most economic decisions are made by the government but markets plays a significant role in the allocation of resources. c. in a mixed economy, all economic decisions are made in markets. d. in a mixed economy, the government makes all economic decisions.