The existence of a deadweight loss associated with a monopoly can be seen because
A) consumers are willing to pay more for the last unit of output than it costs to produce.
B) the cost of the last unit produced is more than consumers are willing to pay for it.
C) the producer surplus is larger than in a competitive market.
D) None of the above.
A
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Explain what happens to the short-run aggregate supply curve when output exceeds its potential
What will be an ideal response?
As income rises ________
A) the number of transactions households and firms undertake should increase B) wealth also rises C) demand for real money balances should increase D) all of the above E) none of the above
Which of the following is a TRUE statement about the economic assumption of rationality?
A) Individuals who are rational necessarily ignore the interests of others. B) Individuals generally act as though they are rational. C) Individual behavior may be irrational but group behavior is always rational. D) People make decisions as if they are omniscient.
Pick the economic variable that is countercyclical
a. Investment b. Government transfer payments c. Prices d. Consumption e. Nominal interest rates