In a situation in which internal costs differ from social costs, we say that there exists a(n)
A. internality.
B. welfare loss.
C. externality.
D. welfare benefit.
Answer: C
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If a monopolistically competitive seller's marginal cost is $3.56, the firm will increase its output if
A) its marginal revenue is less than $3.56. B) its marginal revenue is equal to $3.56. C) its marginal revenue is more than $3.56. D) average total cost is less than $3.56. E) Both answers A and D are correct.
When demand is elastic
A) price and revenue move in opposite directions. B) price and revenue are not related. C) price and quantity demanded move in opposite directions. D) price and revenue move in the same direction.
If a single union supplies all the labor in a competitive labor market, the union probably will
A. increase labor supply to raise employment. B. restrict labor supply to raise wages. C. increase union membership to increase wages. D. act like a competitive firm.
Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be
A) an increase in the price of coffee. B) a decrease in the price of coffee. C) a rightward shift in the demand curve for coffee. D) a leftward shift of the supply curve of coffee.