Use the table below to answer the following question.UnitsMaximum Willingness to PayMarket PriceMinimum Acceptable Price1$14$8$2212843108648885681064814If output is at 3 units, then the market ________ allocative efficiency and ________ productive efficiency.
A. does not achieve, does not achieve
B. does not achieve, achieves
C. achieves, achieves
D. achieves, does not achieve
Answer: A
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Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil workers will ________ and employment of oil workers will ________.
A. increase; increase B. decrease; not change C. increase; decrease D. decrease; increase
When the monopolist decides to supply a given amount to the market, it will:
A. set the price equal to marginal cost. B. set the price higher than what demanders are willing to pay for that amount. C. only sell that amount if it charges what the demanders are willing to pay for that amount. D. set the price lower than the demand curve to create a perceived shortage.
The difference between the economy's potential output and its actual output relative to its potential output at a point in time is called the:
A. trade deficit. B. budget deficit. C. output gap. D. full-employment rate.
Smyth Industries operated as a monopolist for the past several years, earning annual profits amounting to $50 million, which it could have maintained if Jones Incorporated did not enter the market. The result of this increased competition is lower prices and lower profits; Smyth Industries now earns $10 million annually. The managers of Smyth Industries are trying to devise a plan to drive Jones Incorporated out of the market so Smyth can regain its monopoly position (and profit). One of Smyth's managers suggests pricing its product 50 percent below marginal cost for exactly one year. The estimated impact of such a move is a loss of $1 billion. Ignoring antitrust concerns, answer the following question: If Smyth Industries engages in predatory pricing by slashing its price 50 percent
below marginal cost, the present value of current and future profits is: A. $100 million. B. $0. C. ?$100 million. D. $200 million.