A good that has social costs that are equal to private costs has a price that is
A) too high.
B) too low.
C) just right.
D) equal to marginal cost.
Answer: C
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Refer to Figure 7-2. Marginal social benefit is represented by which curve?
A) Supply B) D2 C) D1 D) All of the above represent marginal social benefit.
To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market
The firm can make this threat credible by limiting its own options, and possible actions of this type include: A) signing long-term sales contracts that commit the firm to high levels of output. B) building a very large factory that could potentially produce enough output to meet most of the market demand. C) signing long-term purchase contracts for large amounts of production inputs. D) all of the above
Related to the Economics in Practice on p. 466: Under the Save More Tomorrow retirement plans, employees can pre-commit to save more
A. at the beginning of each fiscal year. B. when income tax rates increase. C. whenever they get a pay raise. D. when the opt out of the social security system.
The average percentage markup in the economy
a. is greater, the more competitive are market conditions b. is greater, the less competitive are market conditions c. is unaffected by the competitive conditions of the economy d. tends to be highly unstable from year to year e. tends to be stable from year to year, ensuring that the price level is stable from year to year