What is the meaning of the phrase "dilemma of regulation"?
A. Natural monopolies achieve economies of scale but charge high prices when there is no government regulation; government regulation reduces prices but results in diseconomies of scale.
B. The competitive price achieves allocative efficiency but may produce economic losses; the normal profit price yields a normal profit but may not be allocatively efficient.
C. The normal profit price achieves allocative efficiency but may produce economic losses; the competitive price yields an economic profit but may not be allocatively efficient.
D. Natural monopolies are profitable but only if the government permits price discrimination; government regulation to restrict price discrimination reduces monopoly prices, but the regulation also reduces monopoly output.
Answer: B
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In economics, the difference between a firm's revenues and its costs is referred to as
A) factor payments. B) profit. C) physical capital. D) capital gains.
Which of the following would be illegal according to the Robinson-Patman Act
a. "Party Packers" getting 10cents off every pack of ribbon they buy after 1000 units b. "Sideline Superstore" receiving 50 cents off a crate of strawberries since it buys from many other suppliers c. "Sam's Sandwiches" receiving 5 cents off per pound of cheese, since they are closer to the warehouse of the supplier d. None of the above
Which of the following is the correct formula to calculate the GDP of a closed economy?
a. Y = C + I + G + (EX – IM) b. Y = C + I + G c. Y = C + I + G + T d. Y = C + I + G + S
In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is an inferior good
a. The population decreases and productivity increases b. Income increases and the price of inputs increase c. The number of firms in the market decreases and income decreases d. Consumer preference decreases and the price of a complement increases e. The price of a substitute in consumption increases and the price of a substitute in production increases