Suppose a monopoly faces an inverse demand curve of P = 6 ? Q and has constant marginal cost of 2. If the government is considering legislation that would regulate price to the competitive level, what is the maximum amount the monopoly would spend on (legal) lobbying activities designed to thwart the regulation?
A. $4
B. $6
C. $2
D. None of the answers are correct.
Answer: A
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Suppose notebooks are produced by a competitive constant-cost industry. Which of the following must cause Nanna's Notebooks to exit the industry in the long run?
a. Nanna's is notified of a rent increase, but her competitors' rents are unchanged. b. A fire destroys half of Nanna's inventory. c. A photographer wins a $10,000 judgment from a lawsuit charging that Nanna's used his photos on notebook covers without permission. d. The price of cardboard used in notebook production rises.
An increase in the price of a particular bond implies an increase in the interest rate for that bond
a. True b. False Indicate whether the statement is true or false
The costs of investment depend on the ________ and the ________.
A. relative price of the firm's output; real interest rate B. price of new capital goods; real interest rate C. taxes levied on the revenue generated; relative price of the firm's output D. marginal product of capital; relative price of the firm's output
Which of the following explains why mortgages weren't considered securities prior to 1970?
A) The Federal Reserve Act of 1913 prohibited mortgages from being considered securities. An amendment to the Act was approved in 1970 that allowed mortgages to be considered securities. B) Until 1970, the average annual increase in housing prices did not allow the buying and selling of mortgages to be profitable. There has been a significant annual increase in housing prices and mortgage values since 1970. C) Congress passed a law in 1970 stipulating that mortgages could be classified as securities. D) Prior to 1970, mortgages were rarely resold in the secondary market.