What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?
What will be an ideal response?
Rent seeking is the act of obtaining special treatment by the government to create economic profit or to divert consumer surplus or producer surplus away from someone else. Often, rent seeking takes the form of lobbying to increase the economic profit of the lobbyist. Rent seeking increases the deadweight loss from monopoly. With rent seeking, not only does the monopoly create the (standard) deadweight loss, but also resources are used up in the process of rent seeking itself.
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A firm's profit is
a. greater if it is a corporation rather than if it is a sole proprietorship b. higher if it raises its price than if it does not c. lower if it lowers its price than if it does not d. never taxed by the government e. its revenue minus its costs
In the circular flow model, households provide all of the following resources to firms except
a. labor b. money c. capital d. entrepreneurship e. land