The ability of a firm to charge a price greater than marginal cost is called
A) monopoly power.
B) price-making power.
C) cost-plus pricing.
D) market power.
Answer: D
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Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has decreased?
A) A B) B C) neither graph D) both graphs
What prompted the large increase in tax rates in 1932 in the midst of an economic recession?
a. concern that inflation would rise due to increases in real output and aggregate demand b. expansionary fiscal policy designed to stimulate aggregate demand c. the Keynesian view that taxes should be increased during a recession d. the view that the federal government should maintain a balanced budget
Assuming the free flow of capital across borders, explain why a country that has a fixed exchange rate cannot have an independent monetary policy reaction curve.
What will be an ideal response?
Compared to a fixed percentage reduction regulation, a tax on pollution encourages:
A. big firms to make larger reductions because they can more easily afford it. B. firms to reduce pollution by the same percent. C. firms that can more cheaply reduce pollution to make larger reductions. D. firms to use the same technology to reduce pollution.