Refer to the graph below for a natural monopoly. Assume the demand for the natural monopoly is originally D1. Now suppose a second firm enters the market and the demand for each firm becomes D2. The result will be
a. profit to rise for both firms.
b. profit to fall for the original natural monopoly firm and a profit to be earned by the new second firm.
c. profits to continue to be enjoyed by the original natural monopoly but a loss for the new second firm.
d. losses for both firms.
d. losses for both firms.
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Why has the federal government generally run budget deficits over the past several decades?
A) Political pressures make expenditures hard to control. B) The federal government's control of the money supply enables it to borrow indefinitely without becoming unable to find creditors. C) The public has accepted the notion that budget deficits can be good for the economy. D) A combination of the three factors mentioned above.
The effect of a decrease in the price of personal computers, other things constant, is likely to be best represented by which of the following?
a. a leftward shift of the demand curve b. a movement leftward along the demand curve c. a rightward shift of the demand curve d. a movement rightward along the demand curve e. a rightward shift of the supply curve
Those who believe the central bank should aim for zero inflation argue that reducing inflation is a policy with temporary costs and permanent benefits. What are the primary costs and benefits they are referring to?
The name given to government programs implemented to prevent or shorten recessions and counteract inflation is
A. supply-side economics. B. contractionary policy. C. monetary policy. D. stabilization policy.