A monopoly:
a. faces the market demand curve which is downward sloping.
b. has a marginal revenue curve which slopes downward and lies below its demand curve.
c. will maximize profits by producing an output level where MR = MC.
d. all of these.
d
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The above figure shows a perfectly competitive firm. If the market price is $15, the firm
A) is incurring an economic loss. B) is making an economic profit. C) is making zero economic profit. D) will immediately shut down. E) might shut down but more information is needed about the AVC.
One of the commonly used assumptions in deriving the Heckscher-Ohlin model is that tastes are homothetic, or that if the per capita incomes were the same in two countries, the proportions of their expenditures allocated to each product would be the
same as it is in the other country. Imagine that this assumption is false, and that in fact, the tastes in each country are strongly biased in favor of the product in which it has a comparative advantage. How would this affect the relationship between relative factor abundance between the two countries, and the nature (factor-intensity) of the product each exports? What if the taste bias favored the imported good?
If a widow is harmed by mail fraud,
a. she may be compensated under property law b. her legal action will be in the category of antitrust law c. she may be compensated under tort law d. this is a potential Pareto improvement e. an economic inefficiency has arisen
Many persons opposed to wealth redistribution maintain that taxing the “winners” of the economic game provides incentive to __________.
A. save more money instead of spending it B. Make even more money to replace the money taxed away C. avoid risk-taking and more wealth creation