Explain why marginal revenue is less than price for a monopolist
To sell additional units, a monopoly must reduce its price. Its marginal revenue is price minus the reduced revenue from customers who would have paid a higher price. Unlike competitive firms, able to sell as many units as they wish without reducing price, monopoly MR is below price.
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A bank is said to have enough liquidity if:
A) it has enough funds to conduct its day-to-day businesses and meet the regulatory requirements. B) the value of its assets exceeds the value of its liabilities by at least $50,000. C) it operates for seven days a week for more than 12 hours a day. D) it holds deposits amounting to at least $100,000.
Does the principle of optimization imply that people always make the best choices?
What will be an ideal response?
Vault cash is a(an)
A) liability of the Fed and is counted as reserves. B) asset of the Fed and is counted as reserves. C) liability of the Fed and is not counted as reserves. D) asset of the Fed and is not counted as reserves.
Although price searchers can set their prices, the prices they can set are still affected by market conditions.
a. True b. False 2. Suppose firms in a competitive price-searcher market with low barriers to entry are earning an economic profit. Firms will (enter/exit) this market until economic profits are (zero/postive/ negative)