Suppose the accompanying figure shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist.
The profit-maximizing price for this monopolist to charge is:
A. A.
B. E.
C. C.
D. B.
Answer: D
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When different consumers pay different amounts of taxes, Ricardian equivalence may fail because
A) alternative ways of collecting the same tax revenue can affect the distribution of income. B) consumers can become jealous of one another. C) such differences in taxes create credit market imperfections. D) higher taxes on more talented people may be politically popular.
The price system is sometimes criticized in that it
A. leads to greater efficiency. B. results in allowing the rich get a disproportionate say in what goods and services are produced. C. coordinates activities without the need for planning by government agencies. D. relies too heavily on input-output analysis.
When aggregate demand exceeds current production
a. both output and the price level are in equilibrium. b. output is not in equilibrium, but the price level is. c. prices are not in equilibrium, but output is. d. neither output nor the price level is in equilibrium.
For the monopolistically competitive firm, in both the short run and the long run
A. price will exceed marginal cost. B. the demand curve is inelastic. C. there will be no economic profit. D. production will be at minimum average cost.