Who loses surplus when consumers in a market are forced to pay a Pigouvian tax for a negative externality?
A. Producers
B. Consumers
C. Others affected by the externality
D. Both producers and consumers lose surplus when negative externalities are internalized.
Answer: D
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The supply curve for a monopoly is:
A. the portion of the marginal cost curve that lies above the average total cost curve. B. the portion of the marginal cost curve that lies above the average fixed cost curve. C. not a curve but a single point. D. the portion of the marginal cost curve that lies above the average variable cost curve.
Suppose Firm A and Firm B are considering whether to invest in a new production technology. For each firm, the payoff to investing (given in thousands of dollars per day) depends upon whether the other firm invests, as shown in the payoff matrix below.
Is this game a prisoner's dilemma?
A. No. B. Yes. C. It cannot be determined. D. Only when both Firm A and Firm B invest.
One of the most important determinants of a good's price elasticity of demand is
A) the profits of suppliers. B) the numbers of buyers in the market. C) the ease with which consumers can substitute other goods for that product. D) the cost of producing the good.
If the expected rate of inflation rises, then the short-run Phillips Curve would:
A. Shift to the right B. Shift to the left C. Become vertical D. Become flat