How does a monopoly transfer consumer surplus to itself?
What will be an ideal response?
The monopoly raises price by lowering the quantity offered for sale. This raises the price consumers must pay for the good compared to the competitive market price. This difference in price multiplied by the quantity the monopolist sells represents the amount of consumer surplus that is transferred to producer surplus.
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
A compensation package offered by employers often includes
A. wages. B. health benefits. C. vacations. D. pensions. E. all of these answer options are correct.
If the private sector anticipates higher future taxes as a result of a current budget deficit, current autonomous saving will decline
a. True b. False Indicate whether the statement is true or false
The nominal interest rate is equal to the:
a. Real risk-free interest rate plus expected inflation. b. Real interest rate plus risk premium plus tax/subsidy premium plus maturity premium. c. Real interest rate plus risk premium plus tax/subsidy premium plus maturity premium plus expected inflation. d. Real interest rate plus expected inflation. e. None of the above.