If an oligopolist cuts the prices of its products,
a. customers will switch to a rival firm.
b. customers will remain unchanged in number.
c. customers will switch from rival firms to buy from them.
d. rival firms will not react.
c
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With a price floor:
A. producer surplus will increase if profits increase. B. producer surplus will increase is profits fall. C. producer surplus will decrease if profits increase. D. producer surplus always decreases.
If DeShawn only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that
a. DeShawn is an irrational consumer. b. The seller earned a $10,000 profit on the sale of the car. c. DeShawn reaped $10,000 of consumer surplus from the transaction. d. The seller received $10,000 worth of producer surplus on the transaction.
An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly. (ii) a single firm owns a key resource. (iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
a. (ii) only b. (iii) only c. (i) and (ii) only d. (ii) and (iii) only
Figure 3.5 illustrates the supply of tacos. If the government offered a subsidy to Mexican restaurants for each taco they produce, this would most likely cause a movement from:
A. point a to point c. B. point c to point b. C. S2 to S1. D. S0 to S1.