The industry elasticity of demand for good Y is ?3, while the elasticity of demand for an individual manufacturer of good Y is ?12. Based on the Rothschild approach to measuring market power, we conclude that:
A. 1/4, indicating there is little monopoly power in this industry.
B. 1/4, indicating there is significant monopoly power in this industry.
C. 4, indicating there is little monopoly power in this industry.
D. None of the answers are correct.
Answer: A
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Speculators believing cocoa prices are going to be higher next year will
A) buy cocoa futures, cause the expected future price of cocoa to fall, and induce some additional cocoa to be stored for future consumption. B) buy cocoa futures, cause the expected future price of cocoa to rise, and induce some additional cocoa to be stored for future consumption. C) sell cocoa futures, cause the expected future price of cocoa to fall, and induce some additional cocoa to be stored for future consumption. D) sell cocoa futures, cause the expected future price of cocoa to rise, and induce some additional cocoa to be stored for future consumption. E) sell cocoa futures, cause the expected future price of cocoa to fall, and induce greater current consumption of cocoa.
The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is
A) b + c + d + e. B) a. C) i. D) a + c + d + e.