Several firms want to be the only horse carriage service in a small tourist town and must pay the city for a license to operate as a monopoly. Competition among the potential firms will result in
A) bidding up the price of the license so that the winning firm makes $0 economic profit.
B) the winning firm making an economic profit because it will be a price maker.
C) the winning firm making an economic profit because it will have no competition.
D) the winning firm making an economic profit because rent seeking cannot occur.
E) a $0 economic profit because monopolies are illegal.
A
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Suppose you are given the following demand data for a product.PriceQuantity Demanded$1030940850760670The price elasticity of demand (based on the midpoint formula) when price increases from $8 to $10 is
A. -.63. B. -2.25. C. -1.60. D. -1.16.
If the interest rate were to fall, we expect that
A) the supply of money will fall. B) the supply of money will rise. C) autonomous expenditures will rise. D) the demand for money will fall.
The larger the U.S. imposed per unit import tariff on a good imported and produced in the U.S.,
A) the smaller the U.S. consumer surplus. B) the larger the U.S. producer surplus. C) the larger the government revenue. D) All of the above.
The sample average of the OLS residuals is
A) some positive number since OLS uses squares. B) zero. C) unobservable since the population regression function is unknown. D) dependent on whether the explanatory variable is mostly positive or negative.