The demand curve a monopolist faces:
a. is more elastic than a perfectly competitive firm's demand curve.
b. is the market demand curve.
c. is as elastic as a perfectly competitive firm's demand curve.
d. is not affected by the prices of complements.
e. will not shift in response to a change in consumer tastes.
b
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In the view of rational expectations theory:
A. People make economic forecasts that are based on insider-outsider relationships and self-fulfilling prophecies B. People form beliefs about future economic outcomes that accurately reflect the likelihood that those outcomes will occur C. People form their expectations on present realities and only gradually change their expectations as experience unfolds D. The economy does not respond quickly to changes in prices, which causes a mis-allocation of economic resources
Assume that price underestimates the value that society places on the flu vaccine. If firms produce where P = MC, firms will be producing
A. the socially efficient amount of flu vaccine. B. more than the socially efficient amount of flu vaccine C. so that consumer surplus is zero. D. less than the socially efficient amount of flu vaccine.