Suppose a new law makes illegal the sale of a good that had been legal. This will
A. eliminate deadweight loss.
B. decrease consumer surplus.
C. increase producer surplus.
D. increase consumer surplus.
Answer: B
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Refer to Table 13-4. Victoria's profit-maximizing quantity sold (Q) and price (P) are
A) Q = 4; P = $6. B) Q = 5; P = $5. C) Q = 6; P = $4. D) Q = 3; P = $7.
Suppose that smart phone producers meet secretly and agree to issue the smart phones of their most successful models sequentially and at the same price that maximizes their profits. After hearing about the secret meeting the U.S
Justice Department is most likely to file charges under the A) Sherman Act. B) Wheeler-Lea Act. C) Robinson-Patman Act. D) FTC Act.
If a consumer purchases a combination of commodities a and b such that MUa/Pa = 50 and MUb/Pb = 30, to maximize utility, the consumer should buy:
a. less of both a and b b. more of both a and b c. more of a and less of b d. less of a and more of b
What did Harvard economist Edward Chamberlain say about the observation that a monopolistically competitive firm's average cost of production exceeds its minimum average total cost?
A) Chamberlain argued that these higher costs represent the wastefulness of this market structure. B) Chamberlain argued that this belief is incorrect. In his view, monopolistically competitive firms do not produce at a cost above their minimum average total costs. C) According to Chamberlain, this cost difference represents the value consumers place on variety and having more choice. D) In Chamberlain's view, this is evidence that monopolistic competition uses society's resources inefficiently and in a fashion that merits government intervention.