Answer the following questions true (T) or false (F)
1. If a monopolist's price is $50 and average total cost is $43, then the average profit is $7.
2. If a monopolist's marginal revenue is $15 per unit and its marginal cost is $25, then to maximize profit the firm should decrease output.
3. In the short run, even if a monopoly's total revenue does not cover its variable costs, it should continue to produce because ultimately in the long run, the monopoly will start earning profits.
1. TRUE
2. TRUE
3. FALSE
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Under President Eisenhower the problem of inflation.
A. got a lot worse. B. got a little worse. C. got a little better. D. got a lot better.
Monopolistically competitive firms constantly develop new products in an effort to
A) make the demand for their product more elastic. B) increase the demand for their product. C) increase the marginal cost of their product. D) None of the above are correct.
The practice by telephone companies of charging lower long-distance rates at night than during the day is an example of:
a. inverted block pricing b. second-degree price discrimination c. peak-load pricing d. first-degree price discrimination e. none of the above
If a market is initially operating competitively and then the government imposes a price floor above the equilibrium price,
a. there will be more resources will be devoted to the production of this product b. quantity demanded will rise c. producer surplus will fall in the short run d. imposition of the floor is probably a positive-sum game e. consumer surplus will fall