What is deadweight loss? Whose loss is it? Explain.
What will be an ideal response?
Deadweight loss is the portion of consumer surplus that no one in society is able to obtain in a situation of a monopoly. It is a loss by consumers because the failure of the monopolist to produce as many units as would have been produced under perfect competition eliminates consumer surplus that otherwise would have been a benefit to consumers.
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Self-interest
A) implies that a person must try to increase wealth at all times. B) implies that people will not give away wealth. C) is consistent with many goals that people pursue, including betterment of others. D) applies only to people in market settings.
Refer to Figure 8.7. Which graph illustrates a firm that experiences economies of scale?
A. A
B. B
C. C
D. Both graphs A and C
A trough in the business cycle:
a. The natural rate of unemployment is at a minimum point b. Structural and frictional unemployment are at their highest levels c. Employment and output reach their lowest levels d. Cyclical unemployment is at a minimum point
Protectionism is the view that free trade is ________ and should be ________.
A. helpful; encouraged B. harmful; restricted C. inevitable; allowed D. illegal; forbidden