Micro econ final
An externality
the impact of one person's actions on the well-being of a bystander is called
Generally fails to maximize total economic well-being
A monopoly market
Marginal revenue equals marginal cost
At the profit-maximizing level of output
a one-unit increase in output will increase the firm's profit.
If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then
It's average total cost is less than $10
If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit,then
Emit a higher level of smoke than is socially efficient
If an aluminum manufacturer does not bear the entire cost of the smoke it emits, it will
Mary pays Cathy $16 so that Mary can smoke.
Mary and Cathy are roommates. Mary assigns a $30 value to smoking cigarettes. Cathy values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem?
In the absence of transaction costs, private parties can solve the problem of externalities on their own.
The coase theorem states that
Barriers to entry
The fundamental source of monopoly power is
A market that fails to allocate resources efficiently
The term market failure refers to
Constrained by demand
When a firm operates under conditions of monopoly, it's price
Price of its output increases
When a monopolist reduces the quantity of output it produces and sells, the
Average total cost declines over large regions of output.
Which of the following is a characteristic of a natural monopoly?
One buyer
Which of the following is not a characteristic of a monopoly?
Subsides
Which of the following policies is the government most inclined to use when faced with positive externality?
A local cable TV provider
Which of the following would be most likely to have monopoly power?
A corrective tax
a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality