The cross elasticity of demand for substitutes is always positive.
Indicate whether the statement is true or false
Ques. 2Which of the following statements is TRUE?
A) Perfectly competitive markets are efficient, but monopoly markets never are efficient.
B) Perfectly competitive markets always reach equilibrium but monopoly markets never reach equilibrium.
C) Perfect price discriminating monopolists can eliminate all deadweight losses and achieve efficiency.
D) All the above statements are true.
Ques. 3For a common resource, efficiency requires that the ________ equals the ________.
A) marginal private benefit; marginal private cost
B) marginal social benefit; marginal social cost
C) marginal private benefit; marginal social benefit
D) marginal social cost; marginal private cost
Ques. 4Albert, Betty, and Cecile live in Norland. Their annual incomes and the amounts they pay in income tax are shown in the table below.
Income Tax
Albert 40,000 8,000
Betty 30,000 4,500
Cecile 60,000 18,000
The income tax in Norland is
A) proportional.
B) fair.
C) regressive.
D) progressive.
Ques. 5There is a growing market for buying and selling information about the online behavior of consumers. Most people use one of only a small number of search engines (such as Google, Bing, or Yahoo) when surfing the net.
It has been hard for new search engines to gain any market share. The market for search is best considered as A) perfectly competitive.
B) oligopoly.
C) monopolistically competitive.
D) monopoly.
Ques. 6Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage ________, which decreases the ________ for each firm's meals.
A) entry; demand
B) entry; supply
C) exit; demand
D) exit; supply
Ques. 7Which of the following four firms would most likely NOT be part of a perfectly competitive market?
A) Mark sells his tomatoes at the local farmers market.
B) The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave.
C) Village Pizza sells pizza in a college town.
D) Space Age Fuel is a gas station in Bend, Oregon.
Ques. 8Which of the following is TRUE about a perfect price discriminating monopolist?
A) Price is greater than marginal revenue.
B) Price always exceeds marginal cost.
C) The firm makes zero economic profit.
D) The firm produces the efficient level of output.
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