Suppose that a perfectly competitive industry becomes a monopoly. What effect will this have on consumer surplus, producer surplus, and deadweight loss?
What will be an ideal response?
If a perfectly competitive industry is monopolized, consumer surplus will decrease, producer surplus will increase, and there will be a deadweight loss.
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The analysis in Chapter 15 implies that the housing bubble of the last decade would likely have been avoided if
A) the Fed had pursued a monetary equilibrium policy as opposed to cheap interest rate policies. B) people weren't as greedy as they were during the beginning and middle of the bubble. C) price controls were established to keep home prices from rising as high as they did. D) markets were better regulated.
The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. Suppose a $30 fee is required to enter the market. If firm A chooses its strategy first, then
A) firm A will not enter. B) neither firm will enter. C) both firms will enter. D) firm A will enter and firm B will not.
The Foreign Corrupt Practice Act (FCPA) ________ facilitating payments that are ________ payments to government officials to expedite their work.
A) allows; small B) does not allow; small C) prohibits; small D) allows; large
If a straight-line demand curve slopes down, price elasticity will:
a. remain the same at all points on the demand curve. b. change between any two points along the demand curve. c. always be greater than one. d. always equal one. e. always be less than one.