The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. The sales tax on anti-freeze decreases the quantity of anti-freeze that automobile owners purchase by
A) 0 gallons.
B) 1000 gallons.
C) 2000 gallons.
D) 3000 gallons.
Ques. 2Natural monopolies are ________ and ________.
A) rival; excludable
B) nonrival; excludable
C) rival; nonexcludable
D) nonrival; nonexcludable
Ques. 3In monopolistic competition, each firm's marginal revenue curve lies ________ its demand curve because of ________.
A) below; barriers to entry
B) below; product differentiation
C) above; barriers to entry
D) above; product differentiation
Ques. 4Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly.
Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement A) together they will operate in a way indistinguishable from a monopoly.
B) the price of a hard drive will be equal to marginal cost.
C) each firm will make zero economic profit.
D) the oligopoly will produce more hard drives than a profit-maximizing monopoly would produce.
Ques. 5Given the data in the above table, income of 13, a price of 1 for a bottle of water and 2 for a hamburger, what is the marginal utility per dollar spent on water and on hamburgers when the consumer is in consumer equilibrium?
A) 20 units of utility per dollar spent
B) 10 units of utility per dollar spent
C) 5 units of utility per dollar spent
D) 1 unit of utility per dollar spent
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