On a production possibility frontier, the idea that production and consumption are limited is expressed by
A) the rate at which the frontier slopes downward
B) the rate at which the frontier slopes upward
C) the items on the X and Y axes
D) the frontier itself
Ans: D) the frontier itself
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Refer to Horizontal Merger. As a consequence of the merger, consumers lose surplus equal to
The following questions refer to the accompanying diagram, which shows the effects of a horizontal merger. Before the merger, the firm behaves competitively producing Q0 and charging P0. The merger lowers the firm's marginal cost and gives the firm enough market power to switch to the monopoly equilibrium.
a. Area A + B.
b. Area C + D.
c. Area C + D + E.
d. Area G.
One point on a market supply curve represents $4 and 100 units quantity supplied. If there are three suppliers, and at a price of $4 one of the suppliers supplies 23 units, then which of the following combinations of price and quantity supplied might hold for the other two suppliers?
A) At $4, quantity supplied could be 40 units for one supplier and 27 for the other. B) At $4, quantity supplied could be 33 units for one supplier and 27 for the other. C) At $4, quantity supplied could be 40 units for one supplier and 37 for the other. D) At $4, quantity supplied could be 77 units for one supplier and 10 for the other. E) There is not enough information to answer this question.
Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when the price is $1.50 per glass. Which of the following points is on the market demand curve?
a. (quantity demanded = 4, price = $2.50)
b. (quantity demanded = 16, price = $2.50)
c. (quantity demanded = 3, price = $1.50)
d. (quantity demanded = 10, price = $1.00)
If lower-income households spend a greater share of their income on cigarettes than do higher-income households, then a tax that raises the price of cigarettes will
A) cause lower-income households to incur a greater loss of consumer surplus than that incurred by higher-income households. B) cause higher-income households to incur a greater loss of consumer surplus than that incurred by lower-income households. C) raise consumer surplus among higher-income households. D) cause consumer surplus to decline among smokers, but the relative impact cannot be determined from the given information.