Which of the following is TRUE of a perfectly competitive firm and a monopoly in the long run?
A. P = ATC
B. P = MC
C. P = MR
D. MR = MC
Answer: D
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Adverse selection in the market for health insurance arises because
A) buyers of insurance know more than insurance companies about the likelihood of an illness for which buyers want insurance. B) the federal government intervenes in insurance markets by controlling prices and reimbursement policies. C) many insurance companies care more about profits than they do about providing services for their customers in the event of illness. D) insurance companies are not allowed to charge premiums that are high enough to insure against "worst-case" illness.
A price ceiling can often be viewed as: a. the government setting price above market equilibrium price
b. an implicit tax on producers and an implicit subsidy to consumers. c. the government setting price below market equilibrium price. d. Both b and c.
Which of the following would shift the long-run aggregate supply curve right?
a. both an increase in the capital stock and an increase in the price level b. an increase in the capital stock, but not an increase in the price level c. an increase in the money supply, but not an increase in the capital stock d. neither an increase in the money supply nor an increase in the capital stock
Figure 3-16
Refer to . When the price falls from P2 to P1, producer surplus
a.
decreases by an amount equal to C.
b.
decreases by an amount equal to A + B.
c.
decreases by an amount equal to A + C.
d.
increases by an amount equal to A + B.