Why does the industry short-run supply curve slope upward?
What will be an ideal response?
Disagree. The industry short-run supply curve slopes up because the individual firms' short-run supply curves slope up. The perfect competitor's short-run supply curve slopes up because the marginal cost curve slopes up, and the marginal cost curve slopes up because of the law of diminishing marginal product. Hence, the industry short-run supply curve slopes up because of the law of diminishing marginal product.
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Refer to Figure 4-1. If the market price is $2.50, what is the consumer surplus on the first ice cream cone?
A) $0.50 B) $1.00 C) $3.50 D) $9.00
When the monopoly insurer cannot observe the care taken by the insured party to avoid an accident, the most profitable contract for it:
a. offers full insurance at a higher price than the full-information policy. b. offers full insurance at a lower price than the full-information policy. c. offers partial insurance at a higher price than the full-information policy. d. offers partial insurance at a lower price than the full-information policy.
Which of the following portions of the national debt impose a net interest burden on the federal government?
a. treasury bonds held by government agencies b. treasury bonds held by private investors c. treasury bonds held by the Federal Reserve system d. treasury bonds held in the Social Security Trust Fund
Economists who think the capture hypothesis explains regulatory behavior will support their claims by noting that
A. regulation as carried out in this country generates larger profits for the firms and does not generate lower prices for consumers. B. Congress ensured that consumers have more influence on the decisions of regulators by setting up the agencies in ways that insulated the regulators from the regulated firms. C. the firms that are regulated have greater incentive to try to influence regulators than do consumers. D. consumers actually dominate regulatory hearings through the influence of consumer advocacy groups.