Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. 
Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 while Acme continues to comply with the collusive agreement, then Mega's economic profit will be ________.
A. $150
B. $200
C. $75
D. $100
Answer: A
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What does it mean for a producer to internalize an externality?
A) The producer is limiting outsourced production. B) The producer is prohibited from producing products which generate externalities. C) The producer must find ways to address externality problems which extend beyond geographic borders. D) The producer is forced to factor into production costs the cost of the externalities created in their production of output.
In the extended classical model, an unanticipated increase in the money supply would cause output to ________ and the price level to ________ in the short run
A) increase; increase B) decrease; remain unchanged C) remain unchanged; increase D) decrease; decrease
Figure 34-7
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In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. The graph indicates Pestoland has an absolute
A. advantage in both pesto and pasta. B. and comparative advantage in both pesto and pasta. C. advantage in both goods, but a comparative advantage only in pesto. D. advantage in pesto only and a comparative advantage only in pasta.
Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C