Suppose you observe that output in an industry occurs on the inelastic part of the market demand curve. Which of the following can you conclude from this?
A. The industry is definitely behaving as a monopoly that is protected by barriers to entry.
B. The industry is definitely not behaving as a monopoly that is protected by barriers to entry.
C. The industry could be perfectly competitive.
D. The industry is definitely not perfectly competitive.
E. Both (a) and (d)
F. Both (b) and (c)
G. Both (b) and (d)
H. None of the above
Answer: F
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Economist Richard Baldwin says the optimism about the Eurozone may be unjustified. His research suggests trade increases in the Eurozone as a result of the currency union:
A) are much larger than previous estimates or forecasts and likely to show future gains. B) are much smaller than previous estimates or forecasts and unlikely to show future gains. C) are less stable and subject to wide variations. D) could be much larger if poor and unstable economies were not in the Eurozone.
The figure above shows the market for milk. If the population increases, then the efficient quantity of milk ________ and the producer surplus ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases