How does a monopoly transfer consumer surplus to itself?
What will be an ideal response?
The monopoly raises price by lowering the quantity offered for sale. This raises the price consumers must pay for the good compared to the competitive market price. This difference in price multiplied by the quantity the monopolist sells represents the amount of consumer surplus that is transferred to producer surplus.
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Which of the following is a result of unemployment that is very low?
a. the few people who are unemployed stop looking for jobs b. wages drop below the level of minimum wage c. companies have difficulties recruiting workers d. companies stop looking for people to fill unfilled jobs
Supply-side economists encourage government to reduce taxes, deregulate, and increase spending on research and development because they think that these types of policies lead to greater long-run economic growth
a. True b. False Indicate whether the statement is true or false