For a government subsidy on a good with an external benefit to result in the efficient amount of output being produced, what must be done?
A) The size of marginal external benefit must be accurately determined.
B) The government must produce the product.
C) Private production and private consumption must both be directly subsidized.
D) The quantity demanded must be decreased to the efficient amount.
E) Private production without the subsidy must be prohibited.
A
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A strategy called "limit pricing" sets the price
A) below the competitive level. B) at the monopoly level. C) at the lowest level that inflicts a loss on the entrant. D) at the highest level that inflicts a loss on the entrant.
The short run is a time period such that
a. the existing firms in the market do not have sufficient time to change the amounts of any of the inputs that they employ. b. the existing firms in the market do not have sufficient time to either increase or decrease their current rate of output. c. the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory. d. new firms may build plants and enter the industry.