If a monopolist had a zero marginal cost of production, it would maximize profits by choosing to produce a quantity where ______.
a. demand was inelastic
b. demand was unit elastic
c. demand was elastic
d. It is impossible to determine where along a demand curve such a monopolist would choose to produce.
Ans: b. demand was unit elastic
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Private placements avoid
A) restrictive agreements. B) SEC registration costs. C) the need for collateral. D) the primary market.
Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:
a. shift to the left as consumers switch from buying discs to cassettes. b. shift to the right as consumers switch from buying discs to cassettes. c. shift to the left as producers increase cassette production and reduce disc production. d. remain unchanged since discs and cassettes are sold in separate markets.
Which of the following propositions would a proponent of supply-side economics be most likely to stress?
a. Because they expand government revenues, higher marginal tax rates will lead to a reduction in the budget deficit and to lower interest rates. b. Because they encourage investors to undertake low-productivity projects with substantial tax-avoidance benefits, higher marginal tax rates promote economic inefficiency. c. Because they do not consume resources directly, income redistribution payments will exert little impact on real aggregate supply. d. The primary impact of a tax reduction on aggregate supply will stem from the influence of the tax change on the size of the budget deficit or surplus.
The lemons problem is a situation of
A) perfect competition. B) asymmetric information. C) price discrimination. D) a natural monopoly.