Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges each customer according to his or her willingness to pay instead of a uniform price of $7. Which of the following statements is true?
A) Julie has converted the consumer surplus (from a uniform price) into economic profit.
B) Julie's has converted the producer surplus (from a uniform price) into consumer surplus.
C) Julie is worse off because the demand for her services is reduced.
D) Julie's customers are better off because their consumer surplus has increased.
A
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The "benefits" from government programs to reduce mismatch unemployment include reduction in
A) private costs such as lost income and erosion of job skills. B) private costs such as lost leisure and lower alcohol consumption. C) social costs such as lower unemployment compensation and welfare payments. D) A and C.
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).
Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price elastic demand?
To signal its intention to restrict credit availability, the Federal Reserve could
A. reduce the discount rate by ΒΌ of a percentage point. B. push the discount rate below the Federal Funds rate. C. keep the discount rate equal to the Federal Funds rate. D. increase the discount rate.