When a new firm considers entering a market, it takes into account only the profit it would make. What are the two external effects that occur in the market that the firm does not consider?
product-variety externality
business-stealing externality
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All of the following practices increase a firm's profit by extracting more consumer surplus than can be obtained by simple monopoly pricing except which one?
A) commodity bundling B) all-or-nothing offers C) two-part pricing D) linear pricing
The ability-to-pay principle is most closely tied to the concept of
a. horizontal equity in taxation. b. fiscal federalism. c. vertical equity in taxation. d. the benefits principle of tax equity.
How does technological advance enhance economic efficiency? Distinguish between its effects on productive efficiency and locative efficiency
What will be an ideal response?
All else equal, a decrease in the rate of inflation ________ aggregate spending and ________ short-run equilibrium output.
A. decreases; decreases B. increases; increases C. decreases; increases D. increases; decreases