Figure 4-14
Frustrated by the cost and ineffectiveness of the war on drugs, the U.S. government could consider "decriminalization" of the use and sale of cocaine. Critics contend that lower prices will expand drug use and that decriminalization will remove the stigma and danger from arrest associated with drug use, thus further increasing the demand and number of addicts. Which graph in Figure 4-14 best illustrates the critics' case?
a.
1
b.
2
c.
3
d.
4
a
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When the Fed conducts an open market sale, it leads to a higher level of investment and output in the economy
Indicate whether the statement is true or false
A price-taking firm and a monopolist are alike in that ______.
a. price equals marginal revenue for both b. both maximize profits by choosing an output where marginal revenue equals marginal cost, provided that price exceeds average variable cost c. price exceeds marginal cost at the profit-maximizing level of output for both d. in the long run, both earn zero economic profits