Under average-cost pricing, an increase in the monopolist's production cost will:
A. decrease its profit because its profit per unit decreases.
B. not affect its profit because the government adjusts the regulated price equal to the average cost.
C. increase its profit because the monopolist can reduce the average cost at a greater output level.
D. None of these
Answer: B
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Older people often reminisce about the “good old days” when prices were much lower. This is misplaced nostalgia primarily because in the “good old days,”
A. prices were not really that low. B. wages were much lower also. C. people worked longer hours. D. people had more leisure time.
Mail-order sales of wine are illegal in some states. Some wineries argue that the ability to ship directly to consumers helps small wineries and that shipping bans unfairly protect home-state wineries, raising prices to consumers. Others argue that the bans allow states to collect tax revenues and to keep wine from being sold to minors. Economists looking at this case would say that one effect of the ban is to prevent:
A. reverse engineering. B. competition to existing sellers. C. a winner-takes-all market. D. a network externality.
In the IS-LM model, changes in taxes initially affect planned expenditures through:
What will be an ideal response?
Other things equal, a fall in the market price caused by a change in supply will
What will be an ideal response?