The existence of a monopoly:
A. creates market inefficiencies.
B. causes a reduction in total surplus.
C. causes consumers to get less at a higher price.
D. All of these statements are true.
Answer: D
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The rash of hurricanes that pelted the Gulf Coast in 2005 resulted in a large decline in gasoline production as many offshore rigs were shut down and many refineries were taken off line while waiting out the hurricane
The decrease in supplies of gasoline led to a run up in prices. Many voters clamored for relief by calling on their congressman and senators to enact temporary price controls. Analyze the impact on the gasoline market that would have transpired had politicians actually headed the calls by voters to impose price controls on gasoline.
Suppose an agent must pay the full marginal cost for an item but splits the marginal revenue with the principal. As a result,
A) joint profit is maximized. B) joint profit is not maximized. C) the agent will not enter into such a contract. D) the agent wishes to sell as many items as he can.
Who actually benefits from a subsidy to sellers?
A. Only consumers benefit from any kind of subsidy. B. Only sellers benefit, since it is their subsidy. C. The benefit is shared depending on elasticity of the supply and demand curves. D. None of these statements is true.
If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?
A) $65 B) $50 C) $15 D) It is impossible to determine without additional information.