What are the reasons for preferring competition to monopoly?
Monopolists sell at too high a price and provide too small a quantity to be efficient, whereas competitive firms operate efficiently in the long run. Efficiency requires MU = MC. For any industry, MU = P, but in a monopoly P is greater than MC, meaning that MU is greater than marginal cost. This means that an expansion of output would yield utility to consumers that is greater than the cost.
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A decrease in the price of oil will cause the:
A. short-run aggregate supply curve to shift to the right. B. aggregate demand curve to shift to the right. C. short-run aggregate supply curve to shift to the left. D. long-run aggregate supply curve to shift to the left.
The simplified expenditure multiplier:
A. is calculated as 1/(1 ? MP). B. has a positive value. C. grows larger as the marginal propensity to consume increases. D. All of these are true.
In the Keynesian theory, output and employment in the economy depend
A. directly on the level of total expenditures. B. inversely on the quantity of resources available to it. C. directly on the level of disposable income. D. directly on the rate of interest.
Recall the Application about the government of Mexico City repainting highway lane lines to transform a 4-lane highway into a 6-lane highway to answer the following question(s).When computing percentage changes, using the simple approach results in increases and decreases which are:
A. identical. B. symmetric. C. not symmetric. D. more accurate than using the midpoint method.