Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low. The correct analysis of this situation is that
a. the producer's decision is irrational, since monopolies are not limited by the demand curve
b. the producer's decision is irrational, since monopolies never go out of business
c. the producer's decision is irrational, since it could simply raise the price
d. the price received by the producer was lower than the marginal cost in the long run
e. the price received by the producer was lower than the average total cost in the long run
E
You might also like to view...
If unemployment and inflation always move in the same direction, then we can infer that business fluctuations are
A. from the demand side. B. from the supply side. C. from both the demand and supply side. D. purely random events.
The difference between a monopsonist's marginal expenditure and that of a price taker is:
A. the marginal cost of the input. B. the input expansion effect. C. the price increase effect. D. the marginal substitution effect.
Because of automatic stabilizers, disposable income varies proportionately less than real GDP during periods of economic fluctuations
a. True b. False Indicate whether the statement is true or false
Which statement is false?
A. During the 19th century the main cash crops grown in the South were cotton, rice, sugar, and tobacco. B. The only real economic conflict between the North and the South before the Civil War was over slavery. C. It took most parts of the South about a century to recover economically from the effects of the Civil War. D. Southern agriculture developed very differently from agriculture in other regions of the nation.