Explain using welfare measures whether consumers prefer a single price monopoly or a perfectly price discriminating monopoly
What will be an ideal response?
Consumers prefer a single price monopoly because they gain some consumer surplus. No consumer surplus exists with a perfectly price discriminating monopoly.
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Which of the following statements is correct?
A) The markup pricing rule that is derived from the rule for profit maximization can be used as a substitute for determining the profit-maximizing level of output by equating marginal revenue and marginal cost. B) It is reasonable to assume that a profit-maximizing firm will never operate in the inelastic portion of its demand curve. C) The ability of a profit-maximizing firm to mark up price above average cost is unaffected by the price elasticity of demand for the firm's output. D) The markup factor and the price elasticity of demand are positively related, i.e., as the price elasticity of demand increases, the markup factor that the profit-maximizing firm can apply to its marginal cost in setting price increases as well.
The discount rate is influenced by Fed actions whereas the Fed sets the federal funds rate
Indicate whether the statement is true or false
The main process by which a recessionary gap is eliminated is a(n)
a. increase in wages that shifts the aggregate supply curve inward. b. drop in wages that shifts the aggregate demand curve inward. c. increase in wages that shifts the aggregate demand curve outward. d. drop in wages that shifts the aggregate supply curve outward.
Rising savings rates in emerging countries in the period 2000-2008 are associated with both falling and rising mortgage interest rates in the United States
Indicate whether the statement is true or false