Consider the two graphs above. Suppose that final goods are assembled only when ordered and to satisfy the precise preferences of each consumer. This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B
B) increase; A
C) decrease; B
D) decrease; A
B
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Several firms want to be the only horse carriage service in a small tourist town and must pay the city for a license to operate as a monopoly. Competition among the potential firms will result in
A) bidding up the price of the license so that the winning firm makes $0 economic profit. B) the winning firm making an economic profit because it will be a price maker. C) the winning firm making an economic profit because it will have no competition. D) the winning firm making an economic profit because rent seeking cannot occur. E) a $0 economic profit because monopolies are illegal.
Refer to Figure 10-4. Which of the following is consistent with the graph depicted?
A) an increase in the proportion of income after net taxes used for consumption B) an increase in transfer payments to households C) an increase in household income D) an increase in tax revenues collected by the government
Nobel Prize-winning economist Gary Becker corrected President Clinton's elasticity estimate for cigarette smoking by
A. Correcting the president's math. B. Showing that cigarettes were actually price-elastic. C. Showing that the demand for cigarettes in the short run was more inelastic than the president calculated. D. Showing that the long-run response to a price increase in cigarettes was likely to be more elastic than the president had estimated.
When there is market failure
A. Government intervention is beneficial only in the case of natural monopolies. B. A laissez-faire approach is the best policy. C. Government intervention is always beneficial. D. Government intervention is beneficial only when the marginal benefit of intervention exceeds the marginal cost.