A monopolist will
A. always charge a price higher than average cost.
B. always charge a price higher than marginal cost.
C. always produce a level of output at which marginal revenue equals marginal cost.
D. both b and c
E. all of the above
Answer: D
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According to the misperceptions theory, when the price level falls below the expected price level
A) the economy's SRAS curve shifts up. B) the economy moves along its AD curve. C) the economy moves along its LRAS curve. D) the economy moves along its SRAS curve.
Suppose twenty neighbors share a park. One of the neighbors, Al, leaves trash in the park. This bothers the other neighbors. According to Coase's Theorem, assigning the property rights to the park to Al
A) will achieve the socially optimal quantity of trash. B) will result in zero trash being dumped in the park. C) might still not achieve the social optimum since coordinating the other nineteen neighbors can be costly. D) is unfair.
Adam Smith, in his book, The Wealth of Nations, advocated:
a. socialism. b. an economy guided by an "invisible hand." c. government control of the "invisible hand." d. the adoption of mercantilism.
If the government charged a tax on monopolists equal to, say, 75 percent of their economic profits, what would happen to the level of output the firm would produce? What about the price? Explain