When government owns a natural monopoly and avoids subsidies, it:
A. sets price above marginal cost.
B. still creates deadweight loss.
C. recognizes setting price equal to marginal cost would cause the enterprise to incur losses.
D. All of these statements are true.
Answer: D
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Assume that at the current market price of $4 per unit of a good, you are willing and able to buy 20 units. Last year at a price of $4 per unit, you would have purchased 30 units. What is most likely to have happened over the last year?
a. Demand has increased b. Demand has decreased c. Supply has increased d. Supply has decreased e. Quantity supplied has decreased
Suppose the government increases government purchases and there is some crowding out. As a result
A) the rightward shift of the aggregate demand curve due to increased government purchases is reinforced by the crowding out effect. B) the rightward shift of the aggregate demand curve due to increased government purchases is offset to some degree by the crowding out effect. C) the rightward shift of the aggregate demand curve due to increased government purchases is completely offset by the crowding out effect. D) the aggregate demand curve shifts right due to increased government purchases and the short- run aggregate supply curve shifts left due to the crowding out effect.
Refer to the figure above. If John spends his entire income on tables, how many tables can he purchase?
A) 8 B) 10 C) 30 D) 40
If the price of a pizza increases and the demand curve for pizza does not shift, then the consumer surplus from pizza will ________
A) increase B) decrease C) equal the producer surplus if the market produces the efficient quantity of pizza D) remain the same