If regulators of the local gas and water utility companies require those firms to price their service at marginal cost
A) there would be a deadweight loss in their markets.
B) the firms might require a tax-financed subsidy to survive.
C) their customers would enjoy no consumer surplus.
D) None of the above answers are correct.
B
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In the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of $5 per ton,
A) a deadweight loss is created. B) the market becomes more efficient. C) consumer surplus increases. D) producers' economic profits increase. E) None of the above answers is correct.
Firm size alone is not the same as market power, as illustrated by
a. a large automaker raising its prices without concern about competition b. a movie theater in an isolated community facing stiff competition c. wheat farmers selling their commodity product to farm cooperatives d. the only newspaper in a metropolitan area facing competition for advertising sales from TV, radio, and the Internet e. None of the answers is correct
If the owner of a nonrenewable resource expects his profits to be high in future, he will abstain from resource extraction in the present period
a. True b. False Indicate whether the statement is true or false
If a contractionary monetary policy reduces nominal income in the short run, but not real income, it must be true that prices:
A. are completely inflexible. B. are at least partially flexible. C. are perfectly flexible. D. have not fully adjusted to the change in aggregate demand.