Briefly describe and compare the efficiency of output and profit in a monopoly.
What will be an ideal response?
It is important to note that while the output level set by the monopolist is inefficient, the profits are not. Why? Because society as a whole does not lose additional amounts due to the monopoly profits. The profits are transferred from consumers to producers, with the monopolists (stockholders and workers) gaining at the expense of consumers who pay a higher price for a monopolist’s product than they would if the product had been produced by a perfectly competitive firm. In short, the monopolist causes a decrease in consumer surplus, an increase in producer surplus, and a deadweight loss (a reduction in economic efficiency).
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Refer to the figure above. If A forms a customs union with B, the value of trade diversion will be
A) $0. B) $10,000. C) $20,000. D) $40,000.
Supply curves generally slope upward because of all of the following reasons except one. Which is the exception?
a. Producers are willing to offer more of a good at higher prices. b. A higher price attracts resources from less-valued uses. c. Producers must be compensated for the rising opportunity cost of additional output. d. Producers have a greater incentive to sell more as the price increases. e. The price of a good usually must fall to induce an increase in quantity supplied.
In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. The involuntary part-time rate is
A) 4.5 percent. B) 10 percent. C) 4.8 percent. D) 5 percent. E) none of the above.
The United States in 2010 had about:
A. 1.8 percent of the world's population and generated about 10 percent of the world's output B. 2.4 percent of the world's population and generated about 20 percent of the world's output C. 4.5 percent of the world's population and generated about 23 percent of the world's output D. 10 percent of the world's population and generated about 30 percent of the world's output