In the nation of Transporta, the income elasticity of demand for used cars is -2.66. So when incomes in this nation increase by 10 percent
A) the quantity of used cars demanded will increase by 26.6 percent.
B) used cars will be normal goods.
C) the quantity of used cars demanded will decrease by 26.6 percent.
D) the demand curve for used cars will shift rightward.
C
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The value of a producer's output minus the value of all intermediate goods used in the production of that output is called the producer's
A) net output. B) accounting profit. C) value added. D) profit margin.
When the social cost curve is above a product's supply curve,
a. the government has intervened in the market. b. a negative externality exists in the market. c. a positive externality exists in the market. d. the distribution of resources is unfair.
Suppose the DeBeers company exercises monopoly power in the distribution of diamonds. This year, the company earns economic profits and maximizes profit. This implies that the price of diamonds per carat will
a. exceed the marginal cost of diamonds, but be equal to the average cost of diamonds. b. be equal to the marginal cost of diamonds. c. exceed both the marginal cost and average cost of diamonds. d. be equal to the average cost of diamonds.
The main purpose of industrial regulation is to:
A. lower price to marginal cost. B. lower price to average total cost such that the firm earns a fair return. C. break monopolies into competing firms. D. reduce X-inefficiency.