Answer the following statement true (T) or false (F)
1) A pure monopolist will maximize profits by producing at that output where price and marginal
cost are equal.
2) In the short run a pure monopolist will maximize profits by producing at that level of output
where the difference between price and average total cost is at a maximum.
3) In the short run a pure monopolist will charge the highest price the market will bear for its product.
4) Pure monopolists always earn economic profits.
1) F
2) F
3) F
4) F
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Refer to the above diagram. A shift from AD1 to AD2 would be consistent with what economic event in U.S. history?
A. Full-employment in the late 1990s. B. Cost-push inflation in the mid-1970s. C. Demand-pull inflation in the late 1960s. D. Recession in 2001.
In the early 2000s, some argued that the Indian government impeded foreign investment with tariffs, investment caps, and tons of red tape. In terms of promoting or retarding economic growth, such policies:
A. increase growth because they keep people producing for the local market. B. decrease growth because they slow the growth of capital. C. increase growth because they stop exploitation by foreigners. D. decrease growth because they cause inflation.
Which of the following statements about a monopolistically competitive firm is FALSE?
A) It tries to differentiate its product from that of competitors. B) It may earn short-run economic profits. C) It produces the quantity at which MC=MR. D) It sets price like a perfectly competitive firm.
What is the difference between explicit collusion and implicit collusion?
What will be an ideal response?