Refer to Figure 4-2. What area represents the decrease in producer surplus when the market price falls from P2 to P1?
A) B + D B) A + B C) C + E D) A + C + E
B
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The use of controlled experiments using particular substances to test hypotheses is most likely to be found in:
A) chemistry. B) economics. C) history. D) the humanities.
Figure 14.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers have pessimistic expectations about the used bikes in the market, how many used plums (high-quality used bikes) will be sold?
A. 0 B. 8 C. 12 D. 16
If two firms playing Cournot are identical with decreasing average costs, how should the firms divide production to maximize joint profits?
What will be an ideal response?
The government is deciding where to put a $1 tax-either in a market with elastic supply and demand curves, or a market with inelastic supply and demand curves. If their aim is to raise the most revenue with the smallest deadweight loss, where should the tax be placed?
A. In the market with elastic supply and demand curves B. Since the burden is shared, it doesn't matter in which market it is placed C. It is impossible to say without more information D. In the market with inelastic supply and demand curves