The social cost attached to monopolies is reflected by the fact that
A. consumers pay prices that exceed the marginal cost of production.
B. consumers are always willing to pay lower prices for a monopolist's product than for the products of perfectly competitive firms.
C. the demand for a monopolist's product is always lower than the demand for the products of perfectly competitive firms.
D. monopolies produce more output than consumers desire to buy.
Answer: A
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Since demand curves are mostly downward sloping, economists tend to ignore the negative sign when calculating the price elasticity of demand
a. True b. False Indicate whether the statement is true or false
Equilibrium in the loanable funds market is initially present at a stable price level (zero inflation) and a nominal (and real) interest rate of 4 percent. If a shift to expansionary monetary policy eventually leads to actual and expected inflation of 6 percent,
a. both the nominal and real interest rates will rise to 10 percent. b. the nominal interest rate will rise to 10 percent, but the real interest rate will remain at 4 percent. c. the real interest rate will rise to 10 percent, but the nominal interest rate will remain at 4 percent. d. both the real and nominal interest rates will remain at 4 percent.
Figure 10-5
Figure 10-5 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry. At point C, the firm would
a.
earn zero economic profit.
b.
earn negative economic profit.
c.
have a zero opportunity cost of capital.
d.
have a negative opportunity cost of capital.
For a cost-push inflation to occur, oil price increases must be accompanied by
What will be an ideal response?