The regulation of natural monopolies:
A. eliminates deadweight loss.
B. always causes the industry to operate at a loss.
C. typically takes the form of setting a maximum price that can be charged.
D. is common in the tobacco industry.
Answer: C
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The income effect of a price change results in a
A) movement along the demand curve due to a change in relative prices. B) shift of the demand curve when income changes. C) shift of the demand curve due to a change in purchasing power brought about by the price change. D) movement along the demand curve due to a change in purchasing power brought about by the price change.
Regarding the output growth slowdown during the 1970s and 1980s, it is true that
a. the slowdown took place in the U.S. but not other developing countries. b. the primary determinant of the slowdown was lower labor productivity growth. c. increases in capital formation did not offset some of the slowdown in labor productivity growth. d. both b and c.
One result of asymmetric information in health insurance markets is
a. an optimal number of insurance policies sold. b. adverse selection. c. externalities in consumption. d. a low marginal benefit of additional information for the buyer of insurance. e. The principal-agent problem.
A decrease in the money wage rate
What will be an ideal response?