The price effect of a price decrease by a monopolist refers to:
A) the loss in revenue due to the price reduction.
B) the increase in sales due to the price reduction.
C) the increase in revenue because of an increase in sales.
D) the decrease in the demand for labor due to the lower price of the final product.
A
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What happens to the Phillips curve when future inflation is expected to rise?
A. The curve shifts to the right. B. The curve becomes horizontal. C. The curve shifts to the left. D. The Phillips curve is unaffected.
You value your favorite shirt at $100. Someone else values it at $80, and that person is willing to pay you $80 for your shirt. Would selling your shirt to this person for $80 be Pareto efficient?
A. No, the person paid you $80 for the shirt so his net benefit was $0, while your net benefit was -$20. For this change to be Pareto efficient, each of you should have the same net benefit. B. Yes, because any time you engage in trade, the result must be Pareto efficient. C. Yes, because even though you lose from the trade and he gains, there is the potential for him to compensate you for your loss. D. No, because both of you are not better off as a result of the trade.