For a perfectly competitive market in which firms face an identical constant marginal costs, the amount of consumer surplus increases if
A) market demand decreases.
B) market demand increases.
C) marginal cost increases.
D) none of the above: insufficient information to answer.
B
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If people withdraw $10 million from the nation's money market mutual funds and redeposit the funds in various checkable and debitable accounts, then
A) M1 and M2 will remain unchanged. B) M1 will increase, M2 will remain unchanged. C) M1 will increase, M2 will decrease. D) M1 and M2 will increase.
A monopolist
A) can charge whatever price it wants because it is the only firm producing the good. B) can usually keep price equal to marginal revenue by lowering the price on the last unit sold only. C) faces a demand curve that is more elastic than the demand curve for the industry. D) is constrained in its pricing decisions by the demand curve it faces.
If the government wanted to encourage home? ownership, it? could:
A. make mortgage interest tax deductible. B. add a? 10% surcharge on every home purchase. C. tax homeowners based on asset values. D. None of the above.
The price of headphones increases from $20 to $24. As a result, the quantity demanded falls from 33 to 27 per week. Calculate the price elasticity of this product using the midpoint method. Show the steps you use.
What will be an ideal response?