A newspaper article in commenting on the local electric monopoly tells its readers that the company's dominant economic position as a monopolist allows it to produce whatever output level it desires and to set whatever price it wishes
Critically evaluate this position.
Monopolies can only control one variable at a time. If they choose to set the price then the output that is sold is a function of demand. If they choose an output level then the law of demand dictates that only one particular price will get the job done. A monopolist cannot simultaneously determine the price and the output level.
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Suppose a particular production process results in a large amount of pollution and the government decides to impose a tax to correct for this externality, such that the socially optimal output will be produced. The tax will have the effect of shifting the
A. marginal private benefit curve to the right. B. marginal social benefit curve to the right. C. marginal private cost curve to the left. D. marginal social cost curve to the left. E. marginal private cost curve to the right.
Indirect quotations in terms of foreign currency refers to:
A) expressing exchange rates as units of foreign currency in terms of domestic currency B) expressing exchange rates as units of domestic currency in terms of foreign currency C) expressing exchange rates of less traded currency by using a "major" currency D) expressing exchange rates in terms of commodities such as gold
We would expect that a rise in labor supply will have a proportionately larger effect on the market wage rate when
A) the demand for labor is unitary elastic. B) the demand for labor is inelastic. C) the supply for labor is elastic. D) the demand for labor is elastic.
An example of a normative statement is:
A) The rate of unemployment is 4 percent. B) A high rate of economic growth is good for the country. C) The federal government spends half of its budget on national defense. D) People with health insurance tend to spend more on health care than those who are uninsured.