Refer to Monopoly Problem. This monopoly will receive producer surplus of
Consider a monopoly with constant marginal costs of $20. Consumers in the market for this monopoly’s product have demand of Q = 100 - 2P.
a. $0
b. $225
c. $450
d. $900
c. $450
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Why is it unlikely that tax increases will be the way to eliminate current U.S. federal budget deficits?
A) The revenues generated by increasing taxes on the rich would only pay for a small portion of the federal budget deficit in any recent year. B) Increasing every worker's taxes by the same amount could eliminate the deficit, but it is likely this action would be viewed as too burdensome for workers with modest incomes. C) Since World War II, on average when taxes were increased by a dollar, federal government spending increased by that much and more. D) All of the above.
If government were to regulate a monopolistically competitive market by setting a single price, a consequence would be:
A. less product variety. B. lower prices in those markets. C. more output supplied to the market. D. All of these statements are true.
If the Fed sells U.S. government securities in the open market, gross domestic product:
a. increases because the resulting increase in the interest rate leads to a decrease in investment. b. increases because the resulting decrease in the interest rate leads to an increase in investment. c. decreases because the resulting increase in the interest rate leads to a decrease in investment. d. decreases because the resulting increase in the interest rate leads to an increase in investment. e. decreases because the resulting decrease in the interest rate leads to an increase in investment.
Which of the following is an example of moral hazard?
a. When a family's belongings are protected against theft and they take special care to look after the house. b. An individual buys a new auto insurance policy which includes a special payment if the car skids on the ice and the person then begins driving recklessly on ice. c. When a country expects assistance in the event of a currency crisis and therefore takes special care to avoid such a crisis. d. When decision-makers expect special assistance in the event of an unfavorable outcome and their behavior changes in such a way to avoid that outcome entirely. e. When a person with health insurance takes great care not to catch a serious cold.