If the market demand curve does not capture all of the benefits to society of buying an additional unit of good, then:
A. the allocation of resources will be socially optimal.
B. the market equilibrium will not be efficient.
C. the market equilibrium will be socially optimal.
D. the market will not be in equilibrium.
Answer: B
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If a single-price monopoly is making a large economic profit, what keeps other firms from competing away the profit?
A) There are barriers to entry. B) The monopoly must be keeping the amount earned secret. C) The market must be too small. D) The existing firm's ATC must be too large to allow competitors to enter and earn an economic profit. E) Nothing, other firms will enter and will compete away the profit.
The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?
A) 0 units of good X and 40 units of good Y B) 6 units of good X and 28 units of good Y C) 10 units of good X and 16 units of good Y D) 3 units of good X and 35 units of good Y
Cartel members have an incentive to cheat because
a. the cartel does not maximize profit b. the cartel price is the competitive price c. each member's output quota is more than the output it would produce as a non-cartel member d. each member's MR is greater than the cartel's MC e. industry economic profit would be higher under competitive conditions
"Economies of scope" occur when
a. fixed costs are high and marginal costs are low. b. a monopoly can produce for the entire market. c. similar production techniques can be applied to several products. d. costs are fully distributed.