The loss of the profit motive by a publicly-owned natural monopoly causes which of the following to happen?
A. Increased pressure from the public to turn a profit
B. Increased pressure from the public to cut costs
C. Decreased incentive to improve efficiency
D. Increased motivation to cut costs
C. Decreased incentive to improve efficiency
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The monetary base increased by 20% during the contraction of 1929-1933, but the money supply fell by 25%. Explain why this occurred. How can the money supply fall when the base increases?
What will be an ideal response?
If the market federal funds rate were below the target rate, the response from the Fed would likely be to:
A. sell U.S. Treasury securities. B. purchase U.S. Treasury securities. C. raise the discount rate. D. raise the IOER rate.
According to classical macroeconomic theory,
a. output is determined by the supplies of capital and labor and the available production technology. b. for any given level of output, the interest rate adjusts to balance the supply of, and demand for, loanable funds. c. given output and the interest rate, the price level adjusts to balance the supply of, and demand for, money. d. All of the above are correct.
Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.
Suppose Quick Buck and Pushy Sales decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Quick Buck cheats by reducing its price to $1 and Pushy Sales matches the price cut, then if consumers are evenly split between the two firms, what will be Quick Buck's economic profit?
A. $3,000 B. $2,000 C. $1,000 D. $1,500