Which of the following is an example of a focal point equilibrium?
A. Purchase of fast food because it is cheap and convenient
B. Avoidance of cheap computers because low price indicates low quality
C. Purchase of hip-hugger pants because pop stars wear them
D. Purchase of an expensive automobile no one else owns to impress others
Answer: C
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A major criticism of monopolies is that they
A.) inhibit technological innovation. B.) limit consumption choices C.) experience economies of scale. D.) Both A and B are true.
If a single-price monopolist sets price where the price elasticity of demand exactly equals 1, its
A) total profits are at a maximum. B) total revenue is at its maximum. C) total revenue is rising, although marginal revenue is falling. D) total revenue is falling. E) marginal revenue is always positive.
If a hurricane were to wipe out the majority of the eastern seaboard in the United States, it would likely cause a:
A. short-run supply shock. B. long-run supply shock. C. long-run demand shock. D. short-run demand shock.
The largest source of receipts for the federal government is
A. personal income taxes. B. Social Security taxes. C. corporate income taxes. D. capital gains taxes.