Why might economists prefer private ownership of monopolies over public ownership of monopolies?
The private monopolist is governed by the market. Even though the market solution is sub-optimal, it may be better than outcomes generated by publicly owned monopolies. Publicly owned monopolies may restrict output to levels below the private market outcome and thus generate an even lower level of social surplus than a private profit-maximizing monopolist.
Private owners have an incentive to minimize cost as long as they reap benefits in the form of higher profits. Government bureaucrats have no incentive to reduce costs. The losers are customers and taxpayers, whose only recourse is the political system.
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Assuming sticky prices and given expectations of future exchange rates, what is the short-run effect on the exchange rate of the U.S. dollar (purchasing euros) and on domestic and foreign rates of return if there is a temporary increase in the quantity of euros?
a. Rates of return on domestic and foreign assets diverge, as the dollar appreciates. b. Domestic and foreign rates of return both fall, as the dollar depreciates. c. Domestic and foreign rates of return converge, as depreciation of the euro raises r turns for U.S. investors who purchase euro-based assets. d. Rates of return on dollar assets fall, causing investors to switch into euro assets and, therefore, the U.S. dollar depreciates against the euro
Suppose Chevrolet produced 90,000 Camaros in the United States in 2012 and during 2012 sold 69,000 to U.S. customers and exported 14,000 to foreign buyers. The remaining Camaros were sold to U.S. customers in 2012
How many of these Camaros would count as a part of U.S. GDP in 2012? A) 69,000 B) 76,000 C) 83,000 D) 90,000