A firm with a demand curve P = 10 - Q is a perfect price discriminating monopolist with zero marginal costs and fixed costs of 12. Consider the following two statements comparing the price discriminating case with a single price monopolist. 1) In this case consumers are better off as a group because more of the product is produced. 2) Producers are better off because they have higher profits. Which of the following comments about these statements is true? 
A. Only the second statement is true.
B. Both statements are true.
C. Both statements are false.
D. Only the first statement is true.
Answer: A
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In the long-run, firms in a monopolistically competitive industry will
a. earn substantial economic profits b. tend to just cover costs, including normal profits c. seek to increase the scale of operations d. seek to reduce the scale of operations
Suppose you form a legal partnership with your best friend, and she purchases consulting services calling for a $100,000 fee. Your business is broke, and you never wanted the consultants to work for you, just your partner did. For how much of this debt are you legally liable?
a. none of it b. $100,000 c. the proportion reflected by the proportion of the business owned d. only an amount equal to the assets of the business e. $50,000
A major contributor to the slowdown in U.S. labor productivity during the 1973-1995 period was
a. capital spending. b. technological change. c. labor force growth. d. investment spending.
Workers typically require higher wages in order to work additional hours because of the
A. Increasing opportunity cost of labor. B. Increasing marginal utility of income. C. Constant marginal utility of income. D. Decreasing value of leisure time forgone.