Suppose that policymakers are considering placing a tax on either of two markets. In Market A, the tax will have a significant effect on the price consumers pay, but it will not affect equilibrium quantity very much. In Market B, the same tax will have only a small effect on the price consumers pay, but it will have a large effect on the equilibrium quantity. Other factors are held constant. In
which market will the tax have a larger deadweight loss?
a. Market A
b. Market B
c. The deadweight loss will be the same in both markets.
d. There is not enough information to answer the question.
b
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A manager believes there is a 5 percent chance their firm will have to pay $1,000,000 and a 95 percent chance they will be found innocent and pay nothing except the legal fees of $100,000. If the manager chooses to not enter into the litigation and to settle for $150,000 (pay the plaintiff), which of the following is true?
A) The manager is a risk lover. B) The manager is risk neutral. C) The manager is risk intolerant. D) The manager is risk averse.
Which of the following is not a reason for compensating wage differentials?
a. The risk involved in certain jobs b. An excess supply of workers in some industries c. A high probability of staying away from home d. To attract more laborers in risky professions e. Unpleasant working consditions
In equilibrium under monopolistic competition: a. marginal revenue exceeds average revenue. b. marginal revenue exceeds marginal cost
c. marginal revenue is equal to marginal cost. d. marginal revenue is less than marginal cost.
Implicit costs can be defined as
A) the non-monetary opportunity cost of using the firm's own resources. B) the deferred cost of production. C) total cost minus fixed costs. D) accounting profit minus explicit cost.