When government intervenes in the production process because external costs exist, it typically attempts to shift the industry's
A) demand curve to the right.
B) demand curve to the left.
C) supply curve to the right.
D) supply curve to the left.
Answer: D
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Answer the following statement(s) true (T) or false (F)
1. When a monopoly supplier acquires a monopoly manufacturer, the vertical merger intensifies the supplier's use of monopoly power over the manufacturer. 2. A buy-out is more likely to delay a rival's reemergence than is predatory pricing. 3. Economic analysis suggests that resale price maintenance is primarily used by manufacturers to keep prices artificially high. 4. A firm has the incentive to cheat on a cartel agreement only when it fears that other cartel members will also cheat. 5. The Prisoners' Dilemma game is another situation where the Invisible Hand Theorem is true.
Consider a small economy in which consumers buy only two goods: apples and pears. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that
a. the number of apples bought by the typical consumer is equal to the number of pears bought by the typical consumer in each year. b. neither the number of apples nor the number of pears bought by the typical consumer changes from year to year. c. the percentage change in the price of apples is equal to the percentage change in the price of pears from year to year. d. neither the price of apples nor the price of pears changes from year to year.
Suppose there is a reduction in cash flow. This suggests that
A) firms have decreased their expectations of future profits. B) the real interest rate has increased. C) the rate of depreciation has increased. D) current profits have decreased. E) all of the above
Producer surplus is
A. the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item. B. the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item. C. the total difference between the total amount that producers actually receive for an item and the total amount that they would have been willing to accept. D. the total difference between the total amount that consumers are willing to pay for an item and the total amount that producers would like to receive.