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Exam 3 - Mock - light bulbs Figure 1 2 The domestic demand...

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ECON 425 - 100 P RACTICE Q UESTIONS FOR E XAM #3 Review Chapter 13, 14, 15. 16 & 18 1. The R&D devision of a monopoly producer of light bulbs develops a new kind of bulb that lasts forever but is otherwise indistinguishable from conventional light bulbs in terms of performance and cost of production. Could it ever be optimal for the monopoly to hide this discovery from the world and continue to produce light bulbs that have a finite lifetime? Briefly explain your answer and think about how your answer might differ depending on whether the monopolists sells or rents its
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Unformatted text preview: light bulbs. Figure 1 2. The domestic demand curve, domestic supply curve, and world supply curves for a good are given in Figure 1. All the curves are linear. Initially, the country allows imports. Then imports are banned. Calculate how consumer and producer surplus change because of the ban. Is the country better off with the ban on imports? (Also, think of what a tariff, subsidy or a quota system would do to this) 25 25...
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