A monopolist engages in price discrimination to:
A. maximize profits.
B. further restrict output to increase its profits.
C. increase consumer surplus.
D. increase price beyond the profit-maximizing level.
Answer: A
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A demand curve is described as perfectly inelastic if
A. the same quantity is purchased regardless of price. B. the same price is charged regardless of quantity sold. C. neither price nor quantity demanded ever change. D. only quantity demanded can change.
When U.S. banks borrow from one another, they must pay the
A) discount rate. B) prime rate. C) Fed funds rate. D) Interbank Offer Rate.
Economics is a social science that involves the study of how individuals
A) develop their tastes and preferences. B) maximize their wealth. C) define happiness. D) choose among alternatives to satisfy their unlimited wants.
The Clear Plastic Company's plant discharges large quantities of toxic chemicals into some groundwater sources. Residents in the surrounding area have higher medical bills because of Clear Plastic's pollution. As long as Clear Plastic Company is allowed to emit pollution and ignore any externalities, the firm will
A. be absorbing the full value of its social costs. B. overproduce. C. charge too high a price for its output. D. under produce.