A government can maximize efficiency in monopoly markets by setting prices equal to the monopolist's average cost of production albeit at the cost of reduced long term innovation.
a. true
b. false
Ans: a. true
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Consider the stock of ocean tuna which is massively overfished. It is rational for an individual to exploit the resource rather than to conserve the stock because
A) the marginal private benefit of harvesting tuna is lower than the marginal social benefit of harvesting it. B) the marginal private cost of harvesting the fish is lower than the marginal social cost. C) the marginal social cost of harvesting the fish is lower than the marginal private cost. D) the marginal private benefit of harvesting tuna is higher than the marginal social benefit of harvesting it.
Use consumer indifference curves and budget lines to illustrate the effects of an increase in income for a normal good and an inferior good (use two graphs). Be sure your diagrams are fully and correctly labeled.
What will be an ideal response?
Few firms in the United States are monopolies because
A) when a firm earns profits, other firms will enter its market. B) most products that firms produce have substitutes. C) few firms experience economies of scale. D) of antitrust laws.
An expansionary gap in the short-run results in: a. lower resource prices in the long run. b. unemployment in the long run
c. a recessionary gap in the long run. d. cost-push inflation in the long run. e. demand-pull inflation in the long run.