The existence of a monopoly:
A. benefits the consumer.
B. creates more consumer surplus.
C. benefits the monopolist.
D. creates a gain of total surplus.
Answer: C
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The difference between an absolute price and a relative price is that:
a. absolute prices are based on costs of production, relative prices are based on market exchange. b. absolute prices are in terms of currency, relative prices are in terms of another good. c. absolute prices are in terms of another good, relative prices are in terms of currency. d. absolute prices never change, relative prices change with inflation.
Suppose the IRS were to introduce a tax exemption for portion of interest income earned on corporate bonds. This would
A) reduce the user cost of capital. B) raise the marginal product capital. C) raise the rate of depreciation. D) All of the above are correct.
Which of the following best represents the consumption function?
A) consumption = autonomous consumption + (the marginal propensity to consume × disposable income) B) consumption = disposable income - (autonomous consumption / the marginal propensity to consume) C) consumption = disposable income × (1 / 1 - the marginal propensity to consume) D) consumption = autonomous consumption + (the marginal propensity to consume × transfer payments) / disposable income
In which of the following statements are the terms "demand" and "quantity demanded" used correctly?
A. When the price of ice cream rose, the demand for both ice cream and ice cream toppings fell. B. When the price of ice cream rose, the quantity demanded of ice cream fell, and the demand for ice cream toppings fell. C. When the price of ice cream rose, the demand for ice cream fell, and the quantity demanded of ice cream toppings fell. D. None of these statements use the terms correctly.