Refer to the graph shown. If a competitive industry producing hamburgers is taken over by a pure monopoly firm that maximizes profit:
A. price will remain at $4 but output will fall by 100.
B. price will rise to $6 and output will fall by 100.
C. price will remain at $6 but output will fall by 100.
D. output will remain at 100 but price will rise to $6.
Answer: B
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If a product has zero external costs, then
A) marginal social cost equals marginal private cost. B) marginal social cost is greater than marginal private cost. C) marginal social cost is less than marginal private cost. D) marginal social cost equals zero. E) We need more information to determine the relationship between marginal private cost and marginal social cost.
Jen spent her weekly allowance of $110 on clothes and cosmetics. Assume that she had allocated $100 to shoes and $10 to lipsticks and is in equilibrium. What can you conclude from her purchase decisions?
a. She likes shoes ten times as much as she likes lipsticks b. Jen liked the last pair of shoes ten times as much as the last tube of lipstick c. Jen purchased hundred pairs of shoes for each tube of lipstick d. She likes lipsticks ten times as much as she likes shoes e. She purchased one pair of shoes for each tube of lipstick
Subsidizing firms that pollute will reduce pollution in the long run
a. True b. False Indicate whether the statement is true or false
When banks receive new deposits, they can make new loans and thus create money:
A. equal to the full amount of the new deposits. B. up to the amount of their checkable deposits. C. only up to the amount of their excess reserves.