Why is a single-price monopoly inefficient?
What will be an ideal response?
In a competitive market, the supply curve is the marginal social cost curve for society, and the demand curve is the marginal social benefit curve to society. The perfectly competitive market is efficient because production occurs where the quantity supplied equals the quantity demanded so that MSB = MSC. The monopolist is inefficient because price exceeds marginal cost at the quantity of output the monopoly produces. When the monopoly equates MC = MR to choose the profit-maximizing level of output, it charges a price from the demand curve that is greater than marginal cost, which means MSB > MSC. Consumer and producer surplus are not maximized and society suffers a deadweight loss.
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Refer to Scenario 18.1. It would be acceptable to both parties to have the fishermen pay the factory
A) $0 to install a filter. B) $500 to install a filter. C) $4,000 to install a filter. D) $6,000 to install a filter. E) any amount greater than $4,000 and less than $6,000 to install the filter and make both parties better off.
The costs involved with breaking a ban placed on a good depend on all of these except the:
A. likelihood of being punished if caught. B. punishment associated with rule breaking. C. ability of the public or individuals to pay for those costs. D. likelihood of being caught.
Which of the following groups has the lowest poverty rate?
A. Married-couple families. B. Whites. C. Foreign-born (not citizens). D. Asians.
During the recessions of 2001 and 2008-09,
A) all measures of the unemployment rate (U-1 through U-6 ) increased. B) only the broader measures of the unemployment rate increased. C) only the narrower measures of the unemployment rate increased. D) the labor force participation rate for women increased. E) the labor force participation rate for men increased.