A local cable company has its rates set at P = $15 by a regulatory commission. Its current output is 10,000 households and its costs are as follows: ATC = $17; AVC = $14; and MC = $15. From this, we can tell that this is:
A. a fair price, and the firm earns a normal profit.
B. a fair price, and the firm earns an economic loss.
C. marginal cost pricing, and the firm earns a normal profit.
D. marginal cost pricing, and the firm earns an economic loss.
Answer: D
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A buyer is said to be a price taker if she:
A) can bargain over the prices of the goods she consumes. B) can purchase any amount of a good at a fixed price provided she has the money to pay for it. C) always pays less than the market-determined price for the goods she is consuming. D) ignores the prices of related goods and considers only the price of the goods she is purchasing.
A law requiring sellers to pay the government a tax per pack on cigarettes has the effect of:
a. shifting the supply curve to the right. b. shifting the demand curve to the right. c. shifting the supply curve to the left. d. shifting the demand curve to the left.
Which of the following statements best describes a comparison between Keynesian and neoclassical models?
a. Neoclassical economics tends to view deflation as a price that might sometimes be paid for lower unemployment; Keynesian economics tends to view deflation as a cost that offers no offsetting gains in terms of lower unemployment. b. Keynesian economics tends to view deflation as a price that might sometimes be paid for lower unemployment; neoclassical economics tends to view deflation as a cost that offers no offsetting gains in terms of lower unemployment. c. Neoclassical economics tends to view inflation as a price that might sometimes be paid for lower unemployment; Keynesian economics tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment. d. Keynesian economics tends to view inflation as a price that might sometimes be paid for lower unemployment; neoclassical economics tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment.
If the price buyers pay rises by the full amount of the tax, the burden...
What will be an ideal response?