If a perfectly competitive firm finds that price is less than its ATC, then the firm
A) will raise its price to increase its economic profit.
B) will lower its price to increase its economic profit.
C) is making an economic profit.
D) is incurring an economic loss.
E) is making zero economic profit.
D
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The Coase Theorem suggests that negotiations to eliminate an externality allow the resource to
A. stop causing the externality altogether. B. move to the person who values it the most. C. move to the person who needs it the most. D. continue to benefit everyone.
The government collects tax revenue of $100 million and has $105 million in outlays. The budget balance is a
A) surplus of $5 million. B) deficit of $5 million. C) surplus of $105 million. D) deficit of $105 million. E) surplus of $100 million and a deficit of $105 million.
Always There Wireless is wireless monopolist in a rural area. There are 200 customers, each of whom has a monthly demand curve for wireless minutes of Qd = 200 - 100P, where P is the per-minute price in dollars and Q is the number of wireless minutes. The marginal cost of providing the wireless service is $0.25 per minute. If Always There charges $0.25 per minute and the largest fixed fee that it can, what is Always There's total profit?
A. $30,625 B. $39,375 C. $40,000 D. $35,000
Which of the following is likely to be more of a problem after the introduction of deposit insurance?
A) moral hazard B) adverse selection C) contagion D) bank runs