"The social cost of a monopoly comes from the fact that it charges a price higher than what consumers are willing to pay." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. The social cost of a monopoly comes from the fact that it charges a price higher than the market clearing price under perfect competition. The monopoly is able to sell at a higher price by producing a smaller quantity than in a perfectly competitive situation. As a result, resources are misallocated.
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The above table gives the market demand and market supply schedules for soda. What is the maximum price consumers are willing to pay for the 400th can of soda?
A) $0.80 per can B) $0.70 per can C) $0.60 per can D) $0.50 per can
The table above shows Tom's total utility from milkshakes and sodas. A soda costs $1.00. What is the marginal utility per dollar spent when the eighth soda is purchased?
A) 32 units per dollar B) 20 units per dollar C) 10 units per dollar D) 8 units per dollar
Evidence from the United States and other foreign countries indicates that
A) there is a strong positive association between inflation and growth rate of money over long periods of time. B) there is little support for the assertion that "inflation is always and everywhere a monetary phenomenon." C) countries with low monetary growth rates tend to experience higher rates of inflation, all else being constant. D) money growth is clearly unrelated to inflation.
The absolute value of the price elasticity of demand at the midpoint of a linear demand curve is always
a. greater than one b. less than one c. one d. zero e. infinity