This graph shows the cost and revenue curves faced by a monopoly. 
According to the graph shown, if Q2 units are being produced, this monopolist:
A. is earning negative profits.
B. is not maximizing profits.
C. is producing where marginal costs are less than marginal revenue.
D. should increase production.
Answer: B
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The lemons problem is that when there are hidden characteristics known only to the seller of a used car,
a. the ratio of lemons to high-quality cars is likely to be high b. the ratio of lemons to high-quality cars is likely to be low c. good used cars will sell for more than their market value d. no lemons will be offered on the market e. the price of lemons will be below their market value
If the federal government is running a budget deficit,
a. the national debt will decline. b. it will have to either raise taxes or reduce expenditures next year. c. the U.S. Treasury will finance the deficit by issuing additional bonds. d. the supply of money will increase and the general level of prices will rise.
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
Under a rule of reason approach, which of the following would be legal in the United States?
A. The merger of Paco's Taqueria and Maria's Mexican Bistro, independent restaurants in the unconcentrated sit-down restaurant market. B. Price fixing between IBM and Compaq. C. Ford and General Motors electing the same person to their boards of directors. D. Kellogg's and General Mills collude to drive Quaker Oats out of the business.