In this consumer and producer surplus graph, what happens at equilibrium (E)?
a. MB = MC
b. MB < MC
c. MB > MC
d. MB + MC = 0
a. MB = MC
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Consider a monopoly who posts an economic profit of $10,000,000. All else equal, this monopolist should expect
A) entry into its market, prices to fall, profits to fall. B) no entry into its market, prices to remain the same, profits to remain the same. C) exit from its market, prices to rise, profits to rise. D) entry into its market, the need to increase price, profits to remain the same.
An allocation satisfies the output efficiency condition if:
A. for every pair of goods, every input's marginal product equals the marginal rate of transformation. B. for every pair of goods, every consumer's marginal rate of substitution equals the marginal rate of transformation. C. only applies for firms that produce the same product. D. only applies for consumers that consume the same goods.
The classical assumption that labor markets clear makes it difficult for that model to explain recessions
a. True b. False
If there are strong economies of scale and scope, then society
A. can benefit from regulation of a natural monopoly. B. can gain when more firms enter the market. C. can gain when regulators place a price floor on the market. D. should promote the expansion of federally run markets.