If a government policy change harms a monopolist, the government could
A) tax those who get additional gains and compensate the monopolist, thereby making the change a Pareto improvement.
B) increase the general tax rate and compensate the monopolist, thereby making the change a Pareto improvement.
C) do nothing, because the change is a Pareto improvement.
D) It is not possible to mitigate the harm to a monopolist.
A
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Barylia is an economy with extractive institutions such as the absence of private property rights and high tax rates. Is it guaranteed that Barylia will always experience no growth or negative growth? Why or why not?
What will be an ideal response?
Why does economic theory predict that a perfectly competitive firm will produce at the point where price equals marginal cost?
a. This point provides an efficient allocation of society's resources. b. This point results in zero economic profit. c. This point maximizes profit for the firm. d. This point will minimize ATC for the firm.