Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market
a. (i) and (ii) only
b. (i) and (iii) only
c. (i), (ii), and (iii) only
d. (i), (ii), (iii), and (iv)
a
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In the long run, a perfectly competitive firm makes zero economic profit. What incentive does the firm have to stay in business if it is making zero economic profit?
What will be an ideal response?
If a good has a price elasticity of demand of -3, it implies that:
A) if the income of the consumer increases by 3%, the quantity demanded of that good will increase by 1%. B) if the income of the consumer increases by 1%, the quantity demanded of that good will increase by 3%. C) if the price of the good increases by 1%, the quantity demanded of the good will decrease by 3%. D) if the price of the good increases by 3%, the quantity demanded of the good will increase by 1%.
Intermediate goods are excluded from GDP because
A) their inclusion would involve double counting. B) they represent goods that have never been purchased so they cannot be counted. C) their inclusion would understate GDP. D) the premise of the question is incorrect because intermediate goods are directly included in calculating GDP.
The absolute value of the price elasticity of demand at the midpoint of a linear demand curve is always
a. greater than one b. less than one c. one d. zero e. infinity