The problem of determining what goods and services society should produce:
A) exists because we can produce more than we need or want.
B) exists because there are not enough resources to provide all the goods and services that people want to purchase.
C) would not exist if all goods and services were scarce.
D) would not exist if government owned all of the resources.
Ans: B) exists because there are not enough resources to provide all the goods and services that people want to purchase.
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The unregulated, single-price monopoly shown in the figure above will produce where its demand
A) equals its MC curve. B) equals its ATC curve. C) is inelastic. D) is elastic.
When there is a capacity constraint
A) firms face sunk costs when deciding whether or not to expand. B) consumers will avoid the producer and go with a firm that has extra capacity. C) firms are not maximizing their profits during high season. D) firms can use peak-load pricing to increase profits during periods of high demand.
Which of the following is NOT a predictable result of a price ceiling set below the market clearing price?
A) an illegal market in the good B) excess quantity supplied C) excess quantity demanded D) lines to purchase the product
Assume that for good X the supply curve for a good is a typical, upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. If the good is taxed, and the tax is doubled, the
a. base of the triangle that represents the deadweight loss quadruples. b. height of the triangle that represents the deadweight loss doubles. c. deadweight loss of the tax doubles. d. All of the above are correct.