A severe drought has devastated cocoa plants, causing an increase in the price of chocolate. In the market for chocolate chip cookies
A) a surplus will arise.
B) supply has decreased and price has increased.
C) quantity has decreased and price has decreased.
D) quantity demanded has increased.
B
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What is the drawback of forcing a natural monopolist to use a marginal cost pricing rule?
A) No deadweight loss is eliminated. B) The firm will incur an economic loss. C) The gain in consumer surplus will be less than the loss in producer surplus, thus creating additional deadweight loss. D) None of the above answers is correct.
Income redistribution ________
A) creates an income distribution that is less equal than the market distribution B) is efficient because it makes the distribution of income more equal. C) eliminates the big tradeoff between rich and poor D) creates a deadweight loss