If a profit-maximizing monopolist is currently charging a price on the inelastic portion of its demand curve, it should ______.
a. raise price and decrease output
b. lower price and increase output
c. reduce both output and price
d. hold output constant and raise price
e. do none of these
Ans: a. raise price and decrease output
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The temporary producers' surpluses earned in the short run by factors that are inelastically supplied are called
a. regressive rents. b. transitory rents. c. windfall rents. d. quasi-rents.
Borem is a big fan of wine from Trader Moe's. Moe's sells a high-quality expensive wine and a cheap low-quality wine. Borem buys both types but tends to buy more bottles of the cheaper wine
Borem later moves to a new city where he must drive a long distance to get his wine at Trader Moe's. Assuming the income effect is small, and that Borem still buys his wine from Moe's, how is he going to change his relative consumption of the expensive and cheap wines?
When the marginal cost of a price-taker firm is more than the market price of its product, the firm should:
a. expand output. b. reduce output. c. maintain output. d. charge more than the market price.
From 2001 to 2004 the U.S. budget went from surplus to deficit. According to the open economy macroeconomic model, this change should have
a. increased U.S. interest rates and increased the real exchange rate of the dollar. b. increased U.S. interest rates and decreased the real exchange rate of the dollar. c. decreased U.S. interest rates and increased the real exchange rate of the dollar. d. decreased U.S. interest rates and decreased the real exchange rate of the dollar.