Refer to the graph above. If the price increases from P1 to P2, then the gain in total revenue is areas:
A. C + F + H and the loss in total revenue is area J.
B. E + F + G and the loss in total revenue is area J.
C. B + E and the loss in total revenue is areas H + I + J.
D. A + B + C and the loss in total revenue is areas G + I + J.
Answer: A
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In the long-run, a firm in monopolistic competition has
A) a price that exceeds its average total cost. B) a price that exceeds its marginal cost. C) an average total cost that exceeds its price. D) a marginal cost that exceeds its price.
Buyers and sellers acting in their own best interest generate outcomes that are in society's best interest when all of the following are true except:
A. buyers and sellers are informed. B. markets are inefficient. C. there are no external benefits. D. there are no external costs.
The economic way of thinking assumes individuals
A) are irrational. B) are only concerned with "number one" (i.e., themselves). C) try to advance their own projects. D) cannot possibly behave in the interests of others.
An efficient tax system should have
a. horizontal equity b. a broad base c. a small number of rates, or brackets d. few exemptions e. all of the above