A perfect price discriminating equilibrium maximizes
A) consumer surplus.
B) the associated deadweight loss.
C) the market inefficiency.
D) total welfare.
D
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The U.S. dollar exchange rate, e, expressed as Japanese yen per U.S. dollar, will depreciate when:
A. the U.S. Federal Reserve tightens monetary policy. B. real GDP in Japan increases. C. real GDP in Japan decreases. D. U.S. consumers decrease their preference for Japanese cars.
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Adverse selection occurs in the used car market because:
A. the buyer has more information than the seller. B. the seller has more information than the buyer. C. both the buyer and the seller have incomplete information. D. Any of these could be the cause of adverse selection in the used car market.
You are part of a local community theater group. It is the goal of the group to increase the amount of revenue earned through ticket sales. Mary says the obvious solution is to increase ticket prices. Is Mary correct?
A. Mary is correct if the demand for tickets is price inelastic. B. Mary is incorrect if the demand for tickets is price inelastic. C. Mary is correct. The increase in ticket prices will always increase revenue. D. Mary is incorrect. The increase in ticket prices will never increase revenue.