If a monopoly engages in rent seeking,
i. its average total cost curve is lower than otherwise.
ii. it might or might not make an economic profit depending on how many other competitors also are rent seeking.
iii. it necessarily incurs an economic loss.
A) i only
B) ii only
C) iii only
D) i and ii
E) i and iii
B
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When law-makers impose ceilings on the amount of annual interest charged by lenders, their actions have the effect of
A) excluding certain borrowers from the legally regulated credit market. B) expanding retail sales. C) increasing the number of loans made. D) lowering interest rates for most borrowers. E) redistributing income from creditors to debtors.
A firm employs 100 workers at a wage rate of $10 per hour, and 50 units of capital at a rate of $21 per hour. The marginal product of labor is 3, and the marginal product of capital is 5. The firm
A) is producing its current output level at the minimum cost. B) could reduce the cost of producing its current output level by employing more capital and less labor. C) could reduce the cost of producing its current output level by employing more labor and less capital. D) could increase its output at no extra cost by employing more capital and less labor. E) Both B and D are true.