How does the demand curve facing a home monopolist compare in a no-trade situation to a situation in which a quota protects the monopolist's output?
a. They are identical.
b. The quota-protected demand curve lies to the right of the no-trade demand curve.
c. The quota-protected demand curve lies to the left of the no-trade demand curve.
d. The no-trade demand curve is perfectly price elastic at the world price; the quota-protected demand curve has a negative slope.
Ans: c. The quota-protected demand curve lies to the left of the no-trade demand curve.
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Refer to Table 19-24. Suppose that a very simple economy produces three goods: pizzas, haircuts, and backpacks. Suppose the quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above
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The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36 . This means that a significant increase in airline ticket prices will cause airline companies to:
a. collect less revenue from short-notice travelers. b. collect more revenue from travelers who book well in advance. c. lose money on short-notice travelers. d. collect less revenue from travelers who book well in advance. e. lose many of its short-notice travelers.
When prices rise, what happens to income?
a. It goes down. b. It buys less. c. It rises to meet prices. d. It is used to buy different things.
According to the Taylor Rule
What will be an ideal response?