The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, deadweight loss occurs because
A) consumers place a greater value on the last apartment unit than the cost to supply it.
B) the supplier of the last apartment unit receives a rental price that is less than the marginal cost of supplying it.
C) the quantity of apartments supplied has decreased.
D) All of the above.
A
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Oscar and Felix are the only firms that clean offices in a large city. They agree to operate as a cartel. The payoff matrix above gives the economic profit that each firm can make
If Felix cheats on the agreement but Oscar complies, Felix makes an economic profit of ________ and Oscar makes an economic profit of ________. A) $10 million; $10 million B) $1 million; $1 million C) -$2 million; $12 million D) $12 million; -$2 million
Contractionary monetary policy ________ interest rates, causing ________ to shift to the ________.
Fill in the blank(s) with the appropriate word(s).
The tax multiplier equals the change in ________ divided by the change in ________
A) taxes; equilibrium real GDP B) equilibrium real GDP; taxes C) taxes; consumption spending D) consumption spending; taxes
If a monopoly discovers that the demand for its output has become more elastic at the original output level, then it will respond by
A) producing more and setting a higher price. B) setting a lower price. C) setting a higher price. D) producing more while leaving price unchanged.