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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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.
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.