There is no unified economic theory of how to construct the institutions that are central to the success of capitalism
a. True
b. False
A
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Suppose you observe that output in an industry occurs on the inelastic part of the market demand curve. Which of the following can you conclude from this?
A. The industry is definitely behaving as a monopoly that is protected by barriers to entry. B. The industry is definitely not behaving as a monopoly that is protected by barriers to entry. C. The industry could be perfectly competitive. D. The industry is definitely not perfectly competitive. E. Both (a) and (d) F. Both (b) and (c) G. Both (b) and (d) H. None of the above
Somebody steals silverware from the dinner table at a nice restaurant
You question them and they justify their behavior by saying, "The restaurant management knows customers steal–they raise the price of their meals and drinks to cover the additional costs of stolen items. Since they pass on the higher costs to all of us who haven't stolen, I think it is only fair I finally get my share of the silverware." The economist would view the above statement as: A) incorrect, because even though people stole silverware, it doesn't make it any more profitable to raise prices. B) correct, because what's fair is fair. C) correct, because economics champions such selfish behavior. D) an ethical problem, and it has nothing to do with economics.
When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect
a. True b. False Indicate whether the statement is true or false
If a demand curve shifts to the left, then
A) demand has increased. B) quantity demanded has increased. C) demand has decreased. D) quantity demanded has decreased.