Which of the following statements explains why monopolies weaken the functioning of the invisible hand?
A) A monopoly is a price taker.
B) The quantity produced by a monopoly is too low.
C) Monopolies face an upward sloping demand curve.
D) A monopoly sets the price of its good below marginal costs.
B
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Assume the firms in a perfectly competitive industry are initially in long-run equilibrium and the cost of labor increases. In the short run, this will cause firms in the industry to:
A) reduce output and incur a loss. B) reduce output and earn a positive economic profit. C) increase output and incur a loss. D) increase output and earn a positive economic profit.
What are the reasons for preferring competition to monopoly?
What will be an ideal response?
For a negative externality, the _________ than the costs imposed on society as a whole.
Fill in the blank(s) with the appropriate word(s)
Refer to the data provided in Table 16.1 below to answer the following question(s).Table 16.1 shows the situation facing two firms, both of which are polluting. Assume that each firm emits 5 units of pollution.Table 16.1Firm AFirm AFirm AFirm BFirm BFirm BReduction of Pollution by Firm AMC of reducing pollution for Firm ATC of reducing pollution for Firm AReduction of Pollution by Firm BMC of reducing pollution for Firm BTC of reducing pollution for Firm B1$4$41$8$82 610212203 9193163641332420565185052480Refer to Table 16.1. Suppose the government wants to reduce the total amount of pollution from the current level of 10 to 4. To do this, the government caps each firm's emissions at 2 units and issues 2 permits to each firm. If firms are allowed to trade permits, what is the total
cost of the pollution reduction? A. $0 B. $30 C. $52 D. $55