When we compare economic welfare in a monopoly market to a competitive market, the profits earned by the monopolist represent
a. a loss in total welfare.
b. a transfer of benefits from the buyer to the seller.
c. the higher marginal costs incurred by the monopolists in comparison to competitive firms.
d. All of the above are correct.
b
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Sun City’s public bus line has been operating at a deficit. The city decides to raise the fare from 50 cents to 75 cents, anticipating enough additional revenue to cover the deficit. What assumption is the city making about price elasticity?
What will be an ideal response?
The production possibilities curve demonstrates the basic economic principle that:
a. market-based economies are more efficient. b. supply will determine demand in the economy. c. the production of more capital goods this year will cause the economy to produce less consumption goods next year. d. to produce more of any one thing, assuming full employment, the economy must produce less of something else. e. to produce more consumption goods this year requires the production of more capital goods this year.
A competitive capital market is important to society because it directs resources toward projects that
a. can be completed quickly. b. create wealth. c. have an outcome that is known with certainty. d. reduce the value of the resources employed.
Assuming that GDP currently equals potential GDP, a cost-push inflation could result from which of the following?
A. a decrease in tax rates B. an increase in the labor force C. a large crop failure that boosts the prices of raw food materials D. an increase in the nation's capital stock