A perfect-price-discriminating monopoly maximizes social welfare as measured by the sum of producer surplus plus consumer surplus
What will be an ideal response?
True. Unlike the competitive market, however, social welfare is all producer surplus. There is no consumer surplus. Thus, while a perfect-price-discriminating monopoly is efficient, many are troubled by it based upon distributional issues.
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The present value formula makes it apparent that:
A) a decline in the interest rate will cause a decision maker to weigh recent period returns relatively more heavily than before the decline. B) an increase in the interest rate will cause a decision maker to weigh distant (or future) returns relatively more heavily than before the increase. C) the present value of a fixed sum decreases as the time until it is to be paid increases. D) all of the above E) both A and C.
In the diagram, the economy's short-run AS curve is line ___ and its long-run AS curve is line ___.
A. 1; 3
B. 2; 4
C. 3; 4
D. 2; 1