Which of the following is true when regulators require a natural monopolist to set price equal to marginal cost?
a. This policy results in a less than socially optimal allocation of resources.
b. The marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit.
c. The monopolist will face recurring losses unless a subsidy is provided.
d. The monopolist will earn a normal profit.
e. The monopolist will earn more than a fair return.
C
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Why do most people choose to specialize in a narrow set of skills for their work, rather than to learn a little bit about several varied fields of endeavor?
A) They feel that doing so will minimize their chances of being unemployed. B) They don't correctly perceive the costs of being so specialized. C) It allows them to earn more income by being more productive. D) They are unaware of how much better off they would be if they diversified their skills.
Suppose Congress enacts investment tax credits to spur more business investment. What impact would this have on the loanable funds market?
a) There would be an increase in supply; the supply curve shifts right. b) There would be a decrease in supply; the supply curve shifts left. c) There would be an increase in demand; the demand curve shifts right. d) There would be a decrease in demand; the demand curve shifts left.
Positive economics answers the question, "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions, "What is?" or "What will be?"
Answer the following statement true (T) or false (F)
Refer to the information provided in Table 14.1 below to answer the question that follows. Table 14.1B's Strategy ?Raise PriceDon't Raise Price?RaiseA's profit $3,000A's profit $10,000?PriceB's profit $3,000B's profit $15,000A's Strategy????Don'tA's profit $15,000A's profit $5,000?RaiseB's profit $10,000B's profit $5,000Refer to Table 14.1. If both firms follow a maximin strategy, the equilibrium in the game is
A. (Raise Price, Raise Price). B. (Raise Price, Don't Raise Price). C. (Don't Raise Price, Don't Raise Price). D. (Don't Raise Price, Raise Price).