Which of the following statements is correct?
A. The pure monopolist will maximize profit by producing at that point on the demand curve
where elasticity is zero.
B. In seeking the profit-maximizing output, the pure monopolist underallocates resources to its
production.
C. The pure monopolist maximizes profits by producing that output at which the differential
between price and average cost is the greatest.
D. Purely monopolistic sellers earn only normal profits in the long run.
Answer: B
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If all firms expect greater demand for their products or services, they will hire _____ resources like labor and capital and the economy will experience _____
a. fewer; recession b. fewer; growth c. more; deflation d. more; recession e. more; growth
In the macroeconomic model of aggregate supply and aggregate demand, price is:
A. the measure of the value of all goods and services produced by the economy. B. represented by GDP. C. calculated as a weighted average of the prices of all goods and services. D. None of these is true.
Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is
a. $8,000. b. $12,000. c. $20,000. d. $32,000.
In the diagram, the elimination of discrimination is best represented by:
A. a move from C to E.
B. an inward shift of the production possibilities curve.
C. a move from A to D.
D. a move from E to C.