poorly phrased econ question

Pick the wrong answer. A. Wellfare is maximized in perfect competition. B. In a monopoly with perfect price differentiation (1st order) there is no deadweight loss. C. Expansive fiscal policy always reduces unemployment. D. Sometimes with a higher price there is a higher demand for a good.

B.

I knew i can count on you. But you shouldn’t choose B -at least if you want to pass.

B

A and C are clearly wrong. B is also wrong. It is not possible to achieve perefect price discrimination. D is correct.

To give some hints… Statement in A is right. Statement in D is right.

Welfare? Do you mean social surplus?

Dreary Wrote: ------------------------------------------------------- > It is not possible to achieve > perefect price discrimination. It’s not possible to achieve a perfect market, although you could encounter some questions about perfect markets. The same with perfect price discrimination.

welfare = social surplus

PPC is possible as long as a monopoly: Faces a downard sloping demand curvce knows of at least 2 different price elasticies from customers the customers buying the product @ the lower price can’t resell to consumers who would pay the higher price

To give the solution: C is the wrong statement you should choose.

For bonus points who wants to list why it’s wrong?

feel free getterdone

Is C wrong b/c sometimes inflation is too high for people to care about wanting a job and not working is more appealing? Their paycheck isn’t enough to pay for goods/services?

A: perfect competition does maximizes efficiency and wellfare B: This ne is true. In a monopoly with perfect price discrimination the former deadweight loss in the single-price monopoly transfers to the monopolist, it is all monopolist’s gain. C: an expansive fiscal policy is one that decreases taxes. It does increases whatever the employee takes home from his/her sallary (the after-tax wage), not necessarily decreasing unemployment. Increasing taxes increases unemployment and decreases real GDP, because work is a production factor. D:necesities

no c is wrong because Keynes is wrong :wink:

That too:)

not when it’s anticipated. But again A is wrong and B is correct only if you make the wrong assumption that you can achieve PPD.

map1 Wrote: > B: This ne is true. In a monopoly with perfect > price discrimination the former deadweight loss in > the single-price monopoly transfers to the > monopolist, it is all monopolist’s gain. Did you change your mind with b?

Very nice map, thanks for the Q cfaisok anyone writing in Toronto?