With rent seeking by a monopoly
A) the monopolist's average total costs will increase so that its average total cost curve is tangent to the demand curve at the profit-maximizing price.
B) a monopoly uses all of what would be its economic profit to prevent other firms from taking its economic rent.
C) the full deadweight loss of monopoly is larger than in the absence of rent seeking.
D) All of the above answers are correct.
Ques. 2In the above figure, if no government intervention occurs, at the unregulated competitive market equilibrium, the marginal cost of the externality is ________ per unit.
A) 3
B) 4
C) 6
D) 7
Ques. 3The opportunity cost to the consumer of purchasing and consuming one more unit of a good is called the marginal benefit.
Indicate whether the statement is true or false
Ques. 4Joe's monthly income increases from 1,000 to 2,000. As a result, he decreases the number of his fast food meals from 20 to 5 per month. To Joe, are fast-food meals a normal or an inferior good? What kind of elasticity can tell the answer? Explain.
What will be an ideal response?
Ques. 5Moral hazard occurs because people act
A) in the interest of others at all time.
B) in the best interest of society.
C) in their own self-interest.
D) like anarchists.
Ques. 6The figure above shows the market for gasoline. The government has imposed a tax on gasoline.
a) What is the amount of the tax per gallon of gasoline? b) How much of the tax is paid by consumers? How much is paid by producers? Which is more elastic, the supply or demand for gasoline?
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