A cartel maximizes industry profit by:
a. eliminating quotas.
b. producing at the kink in its demand curve.
c. producing where MR = MC.
d. giving secret price concessions.
e. producing more output than a monopoly would.
c
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Currently. the price of consuming housing src="https://sciemce.com/media/3/ppg__cognero__Chapter_06_Doing_the_quot_Best_quot_We_Can__media__3e7add47-491f-48be-8fcb-fd865a8ddf80.PNG" style="vertical-align: -8px;" width="17px" height="28px" align="absmiddle" />. At the same time, the government lowers the tax on other consumption, lowering the price from 
is lowered by the fact that home mortgage interest is tax deductible. Suppose the government proposed to eliminate this implicit subsidy of your housing consumption, raising the price from 
to 
to 
.
a. Write down your original budget constraint assuming the consumer has income I.
b. Suppose the utility function 
captures your tastes, and suppose 
, 
, 
, 
and 
. Write out the utility maximization problem for this consumer prior to any policy change.
c. How much housing and other goods will this consumer consume prior to any policy change?
d. When the policy change goes into effect, will this consumer still be able to afford the bundle you derived in (c)?
e. When the policy change goes into effect, what bundle will the consumer consume?
What will be an ideal response?
Max Shreck, an accountant, quit his $80,000-a-year job and bought an existing tattoo parlor from its previous owner, Sylvia Sidney. The lease has five years remaining and requires a monthly payment of $4,000. The lease
A) is a variable cost of operating the tattoo parlor. B) is an implicit cost of operating the tattoo parlor. C) is a fixed cost of operating the tattoo parlor. D) is part of the marginal cost of operating the tattoo parlor.
If people expect the price of a stock to rise in future, the demand curve for the stock:
a. becomes positively sloped. b. shifts to the right. c. becomes horizontal. d. becomes vertical. e. shifts to the left.
What is defined as the ability of a firm to earn high profits by raising and keeping the prices of its products substantially above the levels at which those products would be priced in competitive markets?
a. Economies of scope b. Tacit collusion c. Monopoly power d. Perfect competition