Who is most likely to face the highest finance charges?

In a contestable market with one firm in the market, the existing firm will

A) set its price equal to the monopoly price. B) set its price lower than the monopoly price. C) set its price higher than the monopoly price. D) have a demand curve that is horizontal at the price that will attract new firms to enter the market.

The tax wedge is the difference between the

A) amount of taxes needed to pay off the national debt and the actual amount of taxes. B) nominal and real interest rates. C) pretax and posttax returns to an economic activity. D) amount of taxes needed to balance the federal budget and the actual amount of taxes.