Other things equal, in which of the following cases would economic profit be the greatest?
A. A regulated monopolist charging a price equal to average total cost.
B. A regulated monopolist charging a price equal to marginal cost.
C. An unregulated monopolist who is able to engage in price discrimination.
D. An unregulated, nondiscriminating monopolist.
Answer: C
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How does a central bank influence the lending capacity of the banks?
What will be an ideal response?
The effect of crowding out over the long run is
A. bad because it is deflationary in nature. B. bad because businesses have less access to loans. C. good because it ensures strong businesses. D. good because it tends to reduce taxes.
Suppose the required reserve ratio is 10%. A $75 million cash deposit will allow commercial banks to create at most
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