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Quiz4ans - Name: Kl?f Economics 218, Spring2008 Section:...

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Name: Kl?f· Section: 9:00 Economics 218, Spring2008 K. Segerson QUIZ 4 Please circle the correct answers. 1. Consider a perfectly competitive market with an upward sloping supply curve and downward sloping demand curve. Suppose now the government imposes a price control below the market clearing price. Which of the following statements is NOT true? (a) The price control will always create a deadweight loss. }) The price control will generate a net gain overall for consumers, as long as demand is sufficiently inelastic. (c) The price control will always generate a net loss overall for producers. (d) The price control will lead to an inefficiently low level of production. 2. A firm with market power that uses a per-unit pricing rule maximizes its profit by choosing an output level where (a) price is equal to marginal cost. marginal revenue is equal to marginal cost. (c) output is maximized. (d) marginal revenue is equal to average cost. 3. The Lerner index is (a) an index measuring the increase in the cost of living over time. (b) an index measuring how costs change over time as a firm gains market power.
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Quiz4ans - Name: Kl?f Economics 218, Spring2008 Section:...

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