In Figure 26.1, consumer surplus under monopoly is 
A. FABE.
B. P1AB.
C. EBC.
D. FAC.
Answer: B
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Downward wage rigidity is likely to:
A) decrease unemployment. B) decrease wage rates. C) increase wage rates. D) increase unemployment.
Price cap regulation is a
A) price ceiling. B) price floor. C) form of marginal cost regulation. D) type of rate of return regulation.
Turning points in business cycles occur when
A) a new business cycle is initiated at the trough. B) the economy hits the peak or trough in the business cycle. C) the business cycle begins to follow a new pattern that differs from previous business cycles. D) a new business cycle is initiated at the peak.
You are an analyst with a perfectly competitive firm that makes DRAM memory chips. You must manufacture the chips before you know what the demand will be. Based on the above figure, suppose you think demand will be high and manufacture the profit-maximizing quantity of chips. Demand, however, turns out to be low. Because you thought demand would be high, your profit will be ________ than if you
knew demand was going to be low.
A) $200 million more
B) $400 million less
C) $800 million less
D) $200 million less