In the long run, which of the following is not a problem for a monopolist earning economic profit?
a. other firms have an incentive to create substitutes for the monopolist's product
b. technological change tends to break down barriers to entry
c. patents expire, licenses must be renewed, and new sources of essential resources may be discovered
d. government often decides to regulate monopolies
e. all profit will gradually be converted to consumer surplus
E
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If the crowding-out effect is complete and the marginal propensity to save is 0.25, then an increase in government spending of $100 billion will generate how much more real GDP?
A) $0 B) $400 billion C) $25 billion D) $100 billion
An unexpected large increase in the price of crude oil is an example of a supply shock
Indicate whether the statement is true or false
The state is considering adding a satellite campus to its major university. How can marginal analysis assist, even though the university does not attempt to maximize profits?
What will be an ideal response?
If U.S. prices increase relative to the rest of the world, we would expect:
A. net exports to increase. B. net exports to decrease. C. net exports to be unaffected. D. government spending to increase.