A monopolist can charge any price it wants to for a product, because it has no competitors. What constrains price for a monopoly?
a. Demand
b. Copyright
c. Quality
d. Quantity
a. Demand
While a monopolist can charge any price for its product, that price is nonetheless constrained by demand for the firm’s product. No monopolist, even one that is thoroughly protected by high barriers to entry, can require consumers to purchase its product.
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Aggregate supply changes much faster than aggregate demand
Indicate whether the statement is true or false
________ examines whether one variable has an effect on another by simply looking directly at the relationship between the two variables
A) Reduced-form evidence B) Organizational-model evidence C) Direct-model evidence D) Structural-model evidence
An example of moral hazard is
a. A taxi driver paid per mile taking a longer route than necessary b. a piece-rate garment worker shirking more than a per jour worker c. an hourly salesman working harder than a commission salesman d. an author on contract going to as many book signings as one with a percentage royalty rate