If regulation of the firm called for it to earn only a normal profit or rate of return in Figure 27.1, the regulatory agency should set the price at
A. P0.
B. P1.
C. P3.
D. P2.
Answer: C
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Legal restrictions on entry into an industry
a. are strongly opposed by those already in an industry. b. are promoted through lobbying efforts by those already in the industry, thereby further increasing the social costs of monopoly. c. are promoted by those who wish to enter the industry, thereby potentially increasing the social welfare generated by the industry. d. are always instituted to protect the public's health and welfare.
Economies of scale can be caused by
a. all of the following b. short-run increases in marginal productivity c. the use of larger, more specialized machines d. higher information costs as a firm expands e. bureaucratic red tape as a firm expands
In which of the following situations would a person be best off in real terms?
a. Receiving a 10 percent increase in a nominal wage, with an 8 percent rate of inflation in the economy b. Receiving a 3 percent increase in a nominal wage, with a 0 percent rate of inflation in the economy c. Receiving a 4 percent increase in a nominal wage, with a 5 percent rate of inflation in the economy d. Receiving no increase in a nominal wage, with a 5 percent rate of deflation in the economy e. Receiving a 2 percent decrease in a nominal wage, with a 6 percent rate of deflation in the economy
The following graph is the production possibility curve for a three-person economy, with workers Janna, Drew, and Karl.
The slope of the PPC between points X and Y is determined by ________ opportunity cost.
A. Janna's B. Kari's C. Drew's D. Janna and Drew's