When a patent expires, the firm holding the patent is able to maintain its monopoly control over the market.
Answer the following statement true (T) or false (F)
False
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A cost of aggregation is that:
A. broad economic trends are obscured B. details about individual households and firms are lost C. economy-wide totals cannot be obtained D. the "big picture" cannot be studied
If a firm doesn't make an economic profit it will shut down
Indicate whether the statement is true or false
Which of the following refers to a natural monopoly?
a. A monopoly resulting from government control b. A monopoly resulting from economies of scale c. A monopoly resulting from output leadership d. A monopoly resulting from a large advertising budget e. A monopoly resulting from trade restrictions
Answer the following statements true (T) or false (F)
1. If the price that a firm charges is higher than its average cost of production for that quantity produced, then the firm will earn profits. Conversely, if the price that a firm charges is lower than its average cost of production, the firm will suffer losses. 2. When a firm earns losses because it does not make enough revenue to offset the increased variable costs plus fixed costs, it should remain open in the short run. 3. For a constant cost industry, whenever there is an increase in market demand and price, the supply curve shifts to the right with new firms’ entry and stops at the point where the new long-run equilibrium intersects at the same market price as before. 4. The fact that perfectly competitive markets are the most usual type of market supports the statement that, in the long run, markets will feature both productive and allocative efficiency. 5. A natural monopoly occurs when a company has control of a scarce physical resource.