If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below.
If the regulated pay-per-view charge to watch a fight were $15 per household, then ________ households would watch the fight, and the loss is total economic surplus would be ________ relative to when there is no charge to watch the fight.
A. 10 million; $225 million
B. 10 million; $25 million
C. 20 million; $25 million
D. 20 million; $225 million
Answer: D
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If the firm maximizes its profits, its marginal cost will be
A. $8.
B. $10.
C. $12.
D. $16.
Opponents of using the inflation tax to finance government budget deficits argue that:
A. the economic slowdown produced by the inflation tax is more damaging than the hyperinflation that would occur in the absence of the inflation tax. B. inflation is ultimately beneficial in the long run. C. the government can raise taxes to eliminate any budget deficit. D. the inflation tax is a temporary solution that requires ever higher levels of inflation to remain effective.
In 2002, the euro replaced the currencies of most of the members of the European Union. The euro has:
A. increased transaction costs among EU countries. B. increased macroeconomic independency among EU countries. C. increased monetary policy flexibility for the individual EU countries. D. reduced monetary policy flexibility for the individual EU countries.
Figure 14.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. Initially buyers believe that 50% of used cameras in the market are lemons (low quality). Compared to the outcome with neutral expectations, how many fewer cameras are sold in equilibrium?
A. 10 B. 15 C. 20 D. 25