“Monopolistic firms will always be against regulation.” Evaluate
What will be an ideal response?
This statement is incorrect. In some cases monopolies actually benefit from regulation. Regulation can create a legal monopoly that guarantees a business profit. Regulatory commissions can perform beneficial functions such as creating barriers to entry, developing a kind of cartel between monopolistic firms in the industry, and shielding firms form technological advances in their industry.
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Refer to the scenario above. If Ron has the right to listen to music at night, how much does his neighbor need to pay him to stop playing music?
A) Any amount above $5,000 B) Any amount below $3,000 C) Any amount between $3,000 and $5,000 D) Any amount between $5,000 and $8,000
The new classical model has as its central idea that
A) workers and firms have rational expectations. B) wage and price stickiness explain fluctuations in real GDP. C) shifts in aggregate demand have no impact on real GDP. D) the Federal Reserve should adopt a monetary growth rule.
You have just won a cash award of $500 for academic excellence
A) The substitution effect of this award will be larger than its income effect. B) The income effect of this award will be larger than its substitution effect. C) The substitution and income effects will be of identical size. D) It is impossible to know whether the substitution effect is larger than the income effect or vice versa.
If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, and potential output (Y*) equals 9,000, then government purchases must ________ to eliminate any output gap.
A. decrease by 100 B. increase by 1,000 C. decrease by 1,000 D. increase by 100