Which of the following is true?
a. A lower price will increase your consumer surplus by the amount you were buying originally, times the reduction in the price.
b. A lower price will leave unchanged your consumer surplus for each of the units you were already consuming, but will increase consumer surplus from increased purchases at the lower price.
c. A lower price will decrease your producer surplus for each of the units you were producing, but will not change producer surplus by changing the quantity sold.
d. None of the above is true.
d
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A monopolistically competitive firm is like a perfectly competitive firm insofar as
A) both face perfectly elastic demand. B) both make an economic profit in the long run. C) both have MR curves that lie below their demand curves. D) both make zero economic profit in the long run.
Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he would do if the price of his favorite toothpaste increased. Juan Carlos reports that he would switch to a different brand. The survey asks what he would do if the price of all toothpastes increased. Juan Carlos reports that he must use toothpaste, so he would have to adjust his spending
elsewhere. These examples illustrate the importance of a. changes in total revenue in determining the price elasticity of demand. b. a necessity versus a luxury in determining the price elasticity of demand. c. the definition of a market in determining the price elasticity of demand. d. the time horizon in determining the price elasticity of demand.
Professor Tabarrok suggests that monetary policy is both an art and a science because of the complexity of answering all of the following questions EXCEPT:
A. how to use monetary policy tools. B. where to apply monetary policy tools. C. when to use monetary policy tools. D. which monetary policy tools to use.
According to the shortsightedness effect, politicians tend to favor projects with:
A. short-run benefits and short-run costs. B. short-run benefits and long-run costs. C. long-run benefits and short-run costs. D. long-run benefits and long-run costs.