In Figure 22.2, which area represents total revenue to the tobacco company?
A. BP*C
B. AP*C
C. 0BCQ*
D. 0P*CQ*
Answer: D
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For a monopolist, at the profit-maximizing level of output:
A. price is greater than marginal revenue. B. marginal revenue is greater than average revenue. C. average revenue is greater than price. D. price is equal to marginal revenue.
Answer the following statements true (T) or false (F)
1. Unlike corporate debt, national debt possesses no productivity aspect. 2. Interest on the U.S. national debt adds to the federal deficit. 3. The U.S. Treasury often sells new bonds in order to raise money to pay off maturing bonds. 4. As a percentage of GDP, the U.S. national debt held by the public is larger than in any major European country.
Assume the supply curve for diapers is a typical, upward-sloping straight line, and the demand curve for diapers is a typical, downward-sloping straight line. Suppose the equilibrium quantity in the market for diapers is 1,000 per month when there is no tax. Then a tax of $0.50 per diaper is imposed. The effective price paid by buyers increases from $1.50 to $1.90 and the effective price received
by sellers falls from $1.50 to $1.40 . The government's tax revenue amounts to $475 per month. Which of the following statements is correct? a. After the tax is imposed, the equilibrium quantity of diapers is 900 per month. b. The demand for diapers is more elastic than the supply of diapers. c. The deadweight loss of the tax is $12.50. d. The tax causes a decrease in consumer surplus of $380.
Those who favor active policy making argue that all of the following exist EXCEPT
A) perfectly flexible wages and prices.
B) inflation and unemployment are stable in the short run and predictable in the long run.
C) pure competition is not typical.
D) aggregate demand shocks can influence real GDP and unemployment.