If a monopolist were allowed (and able) to first degree price discrimination, there would be no efficiency/equity tradeoff so long as the government can tax the profits of the firm and redistribute the tax revenues in a lump sum way.
Answer the following statement true (T) or false (F)
True
Rationale: The efficient output level is produced under first degree price discrimination -- and neither a profits tax nor a lump sum subsidy creates inefficiencies. Thus, one could achieve a more "equitable" outcome without any efficiency distortions.
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How are final goods and services valued when measuring nominal GDP?
A) at producer cost B) at base year prices C) at foreign exchange parity D) at current market prices E) at factor market prices
Total profit for a firm is calculated as
a. marginal revenue minus average total cost. b. average revenue minus average total cost. c. marginal revenue minus marginal cost. d. (price minus average cost) times quantity of output.
When the text refers to rational self-interest, it means
A. behavior that makes society better off. B. behavior that hurts other people. C. your focus on your own contributions to society. D. your looking out for what is best for you as an individual.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A. B to A. B. C to D. C. B to D. D. A to C.