A regulated firm may have an incentive to spend an inefficiently high amount on capital when:
a. it becomes deregulated.
b. fair rate of return regulation is used.
c. regulators set price equal to marginal cost.
d. it is part of a monopolistically competitive industry.
e. it is allowed to charge a monopoly price.
b
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Mr. Smith earns $100,000 per year. Each year he spends $50,000 and saves $50,000. He pays a 5 percent sales tax on all of his spending. Assuming the sales tax is the only tax he pays, his average tax rate out of his income is
A) 0 percent. B) 2.5 percent. C) 3.5 percent. D) 5.0 percent.
A subsidy to buyers has been placed on the market in the graph shown. What is the amount of the subsidy per unit of this good?
A. $22
B. $16
C. $10
D. $6
Refer to the game between James and Theodore depicted in Figure 12.1. Who has a dominant strategy?
A. Only James
B. Only Theodore
C. Both James and Theodore
D. Neither James nor Theodore
Structural unemployment is increased when workers can afford to be unemployed for longer periods of time as a result of:
A. unemployment insurance. B. minimum wage laws. C. worker mobility. D. skill-biased technological change.