Market power is illegal
A) True, no one is allowed to charge a price greater than marginal cost.
B) False, firms can freely choose their prices.
C) True, no one is allowed to charge a price greater than average cost.
D) False, because market power guarantees price equal to average cost.
B
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For a perfectly competitive firm, the shutdown point is the
A) amount of output at which price equals minimum average variable cost. B) amount of output at which price equals minimum average total cost. C) price at which economic profit is zero. D) price at which total opportunity cost is zero.
Activity aimed at creating artificial barriers to entry into a particular market
A) is rent seeking. B) has no social cost. C) improves competition. D) improves the economy's efficiency.
A merit good is just another name for a public good
Indicate whether the statement is true or false
Good A has many close substitutes, while good B has no close substitutes. Which of the following is true?
a. the demand for both goods is likely to be inelastic. b. the demand for both goods is likely to be elastic. c. the demand for good A is likely to be elastic, the demand for good B inelastic. d. the demand for good B is likely to be elastic, the demand for good A inelastic. e. both goods will have elasticity of 1.