Refer to Figure 6.6, which shows a market for taxi medallions. Without any limit to the number of medallions (taxi licenses), the consumer surplus from consuming taxicab services is represented by:
A. area ABF.
B. area ACI.
C. area DEH.
D. area CEI.
Answer: B
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When a firm faces a horizontal demand curve,
A. the marginal cost curve is upward sloping. B. the market price is also the firm’s marginal revenue. C. the market demand curve is also a horizontal line at the market price. D. entry by new firms is unlikely.
If Donald receives a pay raise and the income effect outweighs the price effect on his labor supply decisions, he will work:
A. less hours initially but eventually work more. B. more hours. C. the same amount. D. less hours.
Which statement describes the advantage of operating a sole? proprietorship?
A. An important financial advantage in many sole proprietorships is the opportunity to share costs. B. In a sole? proprietorship, the owner and the business are legally inseparable. C. Sole proprietors have more privacy and generally are not required to report anything to anyone. D. Sole proprietorships are? liquid, which also helps give them a long life? span; when shareholders sell or bequeath their? shares, ownership simply passes to a new? generation, so to speak. E. Sole proprietorships have the ability to pool money by selling shares of stock to outside investors.
The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:
A. military goods and capital goods. B. services and nondurable consumer goods. C. clothing and education. D. capital goods and durable consumer goods.