Using the government as a means of redistribution generates equity at the cost of efficiency, in part because
A) the process of redistribution uses up some of society's resources.
B) the process of redistribution creates new resources for society.
C) redistribution creates new incentives to work for both rich and poor.
D) redistribution would not take place otherwise.
Ques. 2For a natural monopoly, if price is equal to marginal social cost, then
A) the deadweight loss is as large as possible.
B) the firm makes zero economic profit.
C) there is no deadweight loss.
D) there is no deadweight loss and the firm makes a positive economic profit.
Ques. 3With regard to its economic profits and economic losses, how is the short run different from the long run for a perfectly competitive firm?
What will be an ideal response?
Ques. 4An auction of the leases to drill for natural gas on about 55,000 acres on the Roan Plateau in western Colorado in August 2008 generated nearly 114 million, a record high for onshore energy lease sales in the lower 48 states.
What is going on in the rental market for land? A) There is a decrease in the value of marginal product for an acre on the Roan Plateau, leading to an increase in the equilibrium rental rate.
B) There is an increase in the value of marginal product for an acre on the Roan Plateau, leading to a decrease in the equilibrium rental rate.
C) There is an increase in the supply of acreage on the Roan Plateau, leading to an increase in the equilibrium rental rate.
D) There is an increase in the value of marginal product for an acre on the Roan Plateau, leading to an increase in the equilibrium rental rate.
Ques. 5If an industry is a natural monopoly and regulators decide that the firm must price at marginal cost, then consumers will be ________ off than if the firm was unregulated and the firm's owners will be ________ off than if it was unregulated.
A) better; better
B) better; worse
C) worse; better
D) worse; worse
Ques. 6The inefficiency created by income taxation occurs due to
A) the cost of collecting taxes and making welfare payments.
B) motivating welfare recipients to work less.
C) motivating income earners to work less.
D) All of the above answers are correct.
Ques. 7When a perfectly competitive firm is in long-run equilibrium, what is the relationship between the firm's marginal cost, average total cost, marginal revenue, and price?
What will be an ideal response?
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