Both price supports and a price floor can
A) create a deadweight loss.
B) decrease output below the equilibrium quantity.
C) decrease the price below the equilibrium price.
D) increase consumer surplus.
E) have no effect on producer surplus.
A
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The equation below gives the degree of economies of scope (SC):
SC = (C(Q1 ) + C(Q2 ) - C(Q1,Q2 )) / C(Q1,Q2 ) where C(Q1 ) is the cost of producing output Q1, C(Q2 ) is the cost of producing output Q2, and C(Q1,Q2 ) is the joint cost of producing both outputs. If SC is negative: A) there are neither economies nor diseconomies of scope. B) there are economies of scope. C) there are diseconomies of scope. D) there are both economies and diseconomies of scope.
An insurance company offering both high-deductible and low-deductible plans is an example of:
A. signaling. B. statistical discrimination. C. building a reputation. D. screening.