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A subsidy produces a net welfare loss to the society because the gain in consumer and producer surplus is less than the (a)    

Which of the following group of stakeholders stand to have a NET GAIN in the market after the government imposes a price ceiling?

• 2

• 2,3

• 2,4

• None

The government imposes a price floor in a market for a normal good, which leads to a welfare loss in the market. Which of the following market changes can reduce the size of this welfare loss?

• A reduction in the costs of production for the producers in the market

• A reduction in the price of a close substitute for this product

• An increase in the income of the consumers

• A reduced taste and preference for the product

Which of the following is not a likely result of a price ceiling being imposed in the market for bread?

• The introduction of non-price rationing mechanisms

• The emergence of a parallel market for bread

• A shortage of bread leading to long lines at bakeries

• An increase in consumer expenditure due to lower prices

(a)   allows a monopolist to charge lower prices and produce a higher level of output than perfect competitive from

Can a firm in perfect competition make profit in the long run?

• Yes, but only abnormal

• Yes, but only normal

• Yes, both normal and abnormal

• No

In the diagram, which curves will shift and which curves will have a movement along them, as a firm in monopolistic competition moves from the short run to the long run?

• MR and AR will shift downward, upward shift of AC, downward movement along MC.

• MR and AR will shift upward, upward movement along AC an MC.

• MR and AR will shift downward, upward shift of MC, downward movement along AC.

• MR and AR will shift downward, downward movement along AC and MC.

In what case out of the following would it be beneficial to society to have a monopoly?

• In the production of a good with a negative externality

• In the production of a good with a positive externality

• In the production of a good which is underprovided

• Monopolies are never beneficial to society

In the long-run diagram of a firm’s average costs below, which section of the LRAC curve shows economies of scale?

• A only

• B only

• C only

• A+B together

In the diagram of a perfectly competitive firm below, which is the price that will earn the firm normal profit in the long run?

• P1

• P2

• P3

• P4