An unregulated paint factory that pollutes a river results in ______ and _____
A. overproduction; a price that exceeds the marginal benefit from the good
B. underproduction; a price that equals the marginal benefit from the good
C. the efficient quantity produced; a marginal benefit equal to the mar-ginal social cost
D. an inefficient quantity produced; a marginal benefit below the mar-ginal social cost
D Figure 9.2 in the textbook shows that answer D is correct.
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Imagine a hypothetical world in which, over the last fifty years, both real GDP and prices have trended downward in most countries. Continuing falls in the level of real GDP and the price level can be explained by
a) neither technological ability nor changes in the money supply can explain continuing falls in the level of real GDP contraction and the price level. b) continuing losses in technological ability alone. c) continuing losses in technological ability and continuing decreases in the money supply. d) continuing decreases in the money supply along.
Answer the following statements true (T) or false (F)
1. For a monopolist maximum profits will occur when the gap between average revenue (or price) and average cost is biggest. 2. In the long run equilibrium, a monopolist will earn zero economic profits. 3. In a monopoly at equilibrium, price is greater than marginal cost. 4. A monopolist will try to charge the highest price that it can charge. 5. In an unregulated monopoly at equilibrium, the output level is higher than the economically efficient level.