Refer to Figure 6.1. The monopolist earns a profit equal to
A. $300.
B. $220.
C. $330.
D. $550.
Answer: C
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An unintended effect of a new tax placed on the producers of good A may include
A. a higher price paid by the consumers of good A. B. less consumers' surplus for the buyers of good A. C. fewer workers employed in the production of good A. D. all of the above
If the price elasticity of demand within the price range $1 and $1.25 for carrots is 0.79 and for radishes is 1.6, then, within that price range
a. carrots are more price elastic than radishes b. radishes are more price elastic than carrots c. carrots and radishes must be substitute goods d. carrots and radishes must be complementary goods e. both carrots and radishes are price elastic
If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will
a. rise by $1. b. rise by more than $1. c. rise by less than $1. d. not change, but profits will decrease.
When PAE < Y the economic response for inventories should be:
A. there will be no change in inventories. B. inventories will increase. C. inventories should decrease initially and then sharply increase. D. inventories will decrease.