If the marginal cost of treating an illness is zero, then the optimal amount of treatment to receive is the amount:
A. for which the average benefit of treatment is zero.
B. for which the marginal benefit of treatment is zero.
C. for which the total benefit of treatment is zero.
D. that makes the patient is as healthy as possible.
Answer: B
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Refer to Monopoly Supplier and Manufacturer. After the merger, the leather company will earn surplus of
The following questions refer to the accompanying diagram, which shows a monopoly leather supplier selling leather to a monopoly shoe manufacturer. The leather supplier initially produces QM and charges the shoe manufacturer PM. Then the leather supplier acquires the shoe manufacturer in a vertical merger.
a. Area A + B.
b. Area A + B + C + D + E.
c. Area F + G + H.
d. Area A + B + C + D + E + F + G + H.
If the price elasticity of demand for a good is 2, then a 10 percent decrease in the quantity demanded must be the result of
a. a 0.2 percent increase in the price. b. a 2.5 percent increase in the price. c. a 5 percent increase in the price. d. a 20 percent increase in the price.
In the circular-flow diagram, which of the following items does not flow from firms to households?
a. goods b. services c. capital d. profit
Which of the following events would increase the four-firm concentration ratio in a milk industry with six firms?
A. The two largest milk producers merge. B. The largest milk producer buys an ice cream-making plant. C. The largest milk producer lures customers away from the second largest producer. D. The four largest milk producers collusively fix prices.