Refer to Figure 15-13. From the monopoly graph above, identify the area representing the deadweight loss
Would the deadweight loss be larger if the demand curve was more elastic or less elastic?
What will be an ideal response?
The deadweight loss = area C + D. The less elastic is the demand curve, the greater market power the firm has, the bigger is the difference between the marginal benefit (which equals the price) and marginal cost of the last unit produced and greater is the deadweight loss due to the monopoly.
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The aggregate production function shows a(n) ________ relationship between ________ and output
A) decreasing; capital stock B) decreasing; labor C) constant; labor D) increasing; capital stock
If the area between the line of equality and the Lorenz curve is 1,250, and the entire area beneath the line of equality is 5,000, the Gini ratio is
A) 0.25. B) 4.00. C) 0.33. D) 0.80.
Why should the GDP accounts matter to the average citizen?
Investment spending
a. cannot be stimulated by decreasing the interest rate. b. is often the cause of business fluctuations in the United States. c. is a remarkably stable function of the level of real GDP. d. is the primary solution to recessions and inflations, according to John Maynard Keynes.