Refer to Figure 15-13. From the monopoly graph above, identify the area representing the deadweight loss
Would the deadweight loss be larger if the demand curve was more elastic or less elastic?
What will be an ideal response?
The deadweight loss = area C + D. The less elastic is the demand curve, the greater market power the firm has, the bigger is the difference between the marginal benefit (which equals the price) and marginal cost of the last unit produced and greater is the deadweight loss due to the monopoly.
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The time it takes for policy makers to obtain data indicating what is happening in the economy is called
A) the data lag. B) the recognition lag. C) the legislative lag. D) the implementation lag. E) the effectiveness lag.
Net national product (NNP) is equal to
A) personal income minus taxes. B) GNP minus consumption of fixed capital. C) GDP plus consumption of fixed capital. D) national income plus consumption of fixed capital.