Which of the following is true about a monopoly?
a. A monopoly charges a higher price and produces a lower output level than if the market were competitive.
b. A monopoly is guaranteed an economic profit.
c. A monopoly charges the highest possible price.
d. A monopoly will shut down whenever losses are incurred.
e. All of these.
a
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If the cross-price elasticity of demand for a good is estimated at -3.9, estimate the percentage change in quantity demanded of the good when the price of the related good increases from $30 per unit to $75 per unit
Also, if it is known that the income elasticity of demand for the same good is 2.5, estimate the percentage change in demand if consumer income increases from $100 to $300.
In a two-period model with default, the nation defaults on its debt in the current period if
A) the market interest rate is high, the cost of defaulting is low, and national debt is high. B) the market interest rate is low, the cost of defaulting is low, and national debt is high. C) the market interest rate is high, the cost of defaulting is high, and national debt is low. D) the market interest rate is low, the cost of defaulting is high, and national debt is low.
Aggregate demand's downward-sloping character reflects three principal influences as shown in which of the following?
a. People's desire to maintain real wealth holdings, the interest rate, and international trade. b. People's desire to increase the price level, the interest rate, and the economic growth effect. c. The interest rate, the economic growth effect, and international trade. d. Cost-pull inflation, demand-pull inflation, and the need to maintain real wealth holdings. e. Recession phases of the business cycle, upturns, and downturns.
The elasticity of demand for gasoline has been estimated to be 2.0, and the standard error is 1.0. The upper and lower bounds on the 95 percent confidence interval for the elasticity of demand for gasoline are:
A. 3 and 2. B. 3 and 1. C. 2 and 1. D. None of the statements is correct.