The greater the marginal propensity to consume in the economy, the smaller the spending multiplier
a. True
b. False
Indicate whether the statement is true or false
False
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For a natural monopoly, if price is equal to marginal social cost, then
A) the deadweight loss is as large as possible. B) the firm makes zero economic profit. C) there is no deadweight loss. D) there is no deadweight loss and the firm makes a positive economic profit.
Tony's Italian Ice is a monopolistically competitive firm. If Tony's earns a profit in the short run, which of the following is most likely to occur?
A) New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the right. B) New firms that sell Italian ice will enter the market and Tony's demand curve will become more inelastic. C) New firms that sell Italian ice will enter the market and Tony's cost curves will shift to the left. D) New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left.
Refer to Figure 14-5. If Netflix lowers its price, will this deter Spotify from setting up a streaming video service?
A) no, because Spotify will make a larger profit than Netflix if it chooses to compete B) yes, because Spotify stands to lose $1 million if it competes with Netflix C) no, because Spotify will make a profit if it competes with Netflix D) yes, because Spotify will make a smaller profit than Netflix if it chooses to compete
Resale is difficult when
A) the good is light-weight. B) the good is expensive. C) transaction costs are high. D) transaction costs are negligible.