One way to deal with the efficiency problem of monopolies is to tax the profits of monopolists.
Answer the following statement true (T) or false (F)
False
Rationale: Taxing monopoly profits does not change monopoly behavior -- because whatever was profit maximizing at a zero profit tax will still be profit maximizing at a positive profit tax.
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The purchase of Treasury securities by the Federal Reserve will, in general
A) not change the money supply. B) decrease the quantity of reserves held by banks. C) increase the quantity of reserves held by banks. D) not change the quantity of reserves held by banks.
Refer to the accompanying figure. Which of the following is true?
A. Point A is efficient because it is farthest from the origin. B. Point F is the most efficient because medical care is the highest there. C. Points B, C, E and F are efficient. D. Point D is efficient because it requires using the fewest resources.
The deposit multiplier is given by the formula
A) change in checkable deposits ÷ change in required reserves. B) change in checkable deposits ÷ change in reserves. C) change in excess reserves ÷ change in checkable deposits. D) change in legal reserves ÷ change in excess reserves.
Exhibit 8-8 A firm's cost and marginal revenue curves
In Exhibit 8-8, product price in this market is fixed at $35. This firm is currently operating where MR = MC. Which of the following is true?
A. Price > AVC and this firm should shut down. B. This firm is earning a profit of zero. C. This firm could increase profits by increasing output. D. Price > AVC and the firm should continue producing its current output.