What does the deadweight loss of monopoly measure?
What will be an ideal response?
It measures the inefficiency associated with monopoly because the level of production is lowered. Since fewer units are produced there is a loss of both consumer and producer surplus for those units; this is known as a loss in market surplus.
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In the short run, changes in output can only be brought about by a change in the quantity of variable inputs
Indicate whether the statement is true or false
Classical economists believe that ________
A) it takes a long time for economic variables to reach equilibrium B) short-run fluctuations are too infrequent and mild to be of much interest C) real variables like output and investment are not determined by nominal variables D) all of the above E) none of the above
Electricity accounts for almost 20% of the cost of making steel. A 10% increase in electricity prices results in steel firms decreasing production and thereby demanding 5% less electricity
Over many years, technological innovations can change the way steel firms make steel and reduce the industry's energy requirements. This suggests that the steel industry's short-run elasticity of demand for electricity is probably A) less than one in absolute terms in the short run. B) less than its long-run elasticity of demand for electricity. C) Both A and B above. D) Neither A nor B above.
A buyer always wants to:
A. buy for a price that is as high as possible, but never higher than his willingness to pay. B. buy for a price that is as low as possible, but never lower than his willingness to pay. C. buy for a price that is as low as possible, but never higher than his willingness to pay. D. buy for a price that is as high as possible, but never lower than his willingness to pay.