Explain why monopolists do not achieve efficiency
Efficiency would be achieved by producing the quantity of output associated with the minimum point on
the monopolist's ATC curve. Monopolists produce less than this quantity of output, however, because their
goal is profit maximization, which they achieve by producing at the point where their marginal revenue
equals their marginal cost. That point is unrelated to minimum ATC.
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A currency drain occurs because people want to hold some of their money as currency rather than as deposits
Indicate whether the statement is true or false
Explain the concept of inefficiency in terms of a production possibilities curve.
What will be an ideal response?
You are the manager of a monopoly that faces a demand curve described by P = 230 ? 20Q. Your costs are C = 5 + 30Q. The profit-maximizing output for your firm is:
A. 5. B. 7. C. 6. D. 4.
An increase in price causes:
A. a decrease in total revenue due to the price effect. B. an increase in quantity demanded. C. an increase in total revenue due to the price effect. D. an increase in total revenue due to the quantity effect.