A justification for patents is that without patents consumer surplus would be
A) larger than with the patent.
B) zero since the product would not be invented.
C) only slightly smaller than with the patent.
D) zero since the monopoly would be a revenue maximizer.
B
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As the price of computers falls, the quantity of computers demanded increases. This is an application of:
A. the production possibilities curve B. the law of demand C. the law of supply D. needs versus wants
Used car buyers will believe that a car is of good quality when the seller signals the car's high quality by offering a warranty when
A) a warranty on a lemon is costly to the seller. B) warranties are offered on all cars. C) warranties are only offered on lemons. D) a warranty on a good car is a false signal.
Tele-Com, Inc, the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the
a. demand curve for the Disney Channel shifted to the right. b. supply curve of the Disney Channel shifted to the left. c. demand for the Disney Channel is elastic in this price range. d. demand for the Disney Channel is inelastic in this price range.
Disposable income is
A. The amount households have left to spend after savings are subtracted. B. After-tax income of households; personal income less personal taxes. C. The amount the household sector earns in producing the GDP. D. Personal income plus income taxes.