Why does a monopoly firm not have a supply curve?
What will be an ideal response?
Firms that are price takers will decide how much to produce based on the given market price. The quantity at which the marginal cost of producing the last unit of a good is equal to any given market price determines the firm's supply decisions. However, monopolists do not vary their production based on market price because they set the price; it is not relevant to ask how much of a good a monopolist will produce at a given price. Since a monopolist's production decision is based on demand, it cannot be depicted as an independent supply curve (keep in mind that the supply curve is willingness to sell at various prices, regardless of demand). A monopolist chooses both price and quantity.
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Necessities such as food and shelter have inelastic demand.
Answer the following statement true (T) or false (F)
Which of the following statements is true?
a. Interest rates charged to well-known corporations are higher than rates charged to individuals because corporations can afford it. b. If people expect higher rates of inflation, the market interest rate will decrease because fewer people will borrow. c. Interest rates in unstable countries are lower than rates in stable countries. d. The risk cost of doing business in a high-crime area is greater and the cost of borrowing is, therefore, greater there. e. The lower the tax rate, the greater the cost of borrowing.
If the Fed purchases government securities from the public, the
a. money supply will decrease. b. reserves of commercial banks will decrease. c. required reserves ratio will increase. d. monetary base will increase.
Which of the following is not an example of a factor of production?
a. labor b. interest c. land d. capital