How does a voting structure that relies on unanimity for an action guarantee that no one will be adversely affected? Why isn't this type of decision making used more frequently?
Since everyone must agree for a decision to be made, no individual will agree to undertake an action that adversely affects him, and no one will agree to a decision that makes him worse off. A person will not agree unless the action is altered in a manner that makes him better off or until he is offered compensation. This type of decision-making structure is infrequently used because of the high transaction costs involved. As the group increases in size, it becomes increasingly difficult to get everyone to agree. Further, some may choose to strategically hold out until they can receive additional compensation for agreeing.
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A government can impose an import quota or an equivalent tariff that achieves the same impact on trade. What is the key difference in the welfare outcomes of these two policy options?
A) The domestic quantity supplied is larger under the tariff policy. B) The domestic price is higher under the tariff policy. C) The domestic price is lower under the tariff policy. D) The government captures some of the profits from foreign suppliers through the tariff revenue.
If the income elasticity of demand is negative, this means that the good is
a. an inferior good b. sold at a lower than equilibrium price c. provided by a monopoly producer d. provided by competitive producers e. a normal good
Price discrimination
a. forces monopolies to charge a lower price as a result of government regulation. b. is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price. c. is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices. d. increases the consumer surplus associated with a monopolistic market.
If a union gains significant monopoly power in a competitive market, employment:
A. should decrease and wages should increase. B. should increase and wages should decrease. C. and wages should increase. D. and wages should decrease.