Refer to the graphs shown.
The maximum profits that an efficient monopolist that produces a profit-maximizing quantity could earn is best shown by the area:
A. A in graph (1).
B. A + B in graph (1).
C. C in graph (2).
D. C + D in graph (2).
Answer: B
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
If the demand curve for a good is horizontal, a tax is levied on this product is
A) split between the buyers and the sellers but not evenly so that either the buyer or the seller pays more. B) split evenly between the buyers and the sellers. C) paid entirely by buyers. D) paid entirely by sellers. E) not paid by either the buyers or the sellers.
Which of the following would cause the aggregate demand curve to decrease, ceteris paribus?
a) An increase in income taxes. b) An increase in the value of the stock market. c) Strong performance of foreign economies. d) A decrease in interest rates.
One problem with the unemployment rate is that:
A. discouraged workers are included in the calculation. B. the data includes part-time workers as fully employed. C. underemployment is measured in the calculation. D. teen workers are excluded from the statistics.