"Unlike a perfect competitor, a profit-maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost." Do you agree or disagree? Why
What will be an ideal response?
Disagree. To maximize profits, the monopolist produces at an output rate at which marginal revenue equals marginal cost as does a perfect competitor. If it goes past that point, then the incremental cost of producing any more units will exceed the incremental revenue and so profits decrease. Below that point, the incremental revenue of producing any more units will exceed the incremental cost and so profits are not maximized either. However, because price is higher than marginal revenue in a monopoly, the profit-maximizing monopolist sells at a price higher than marginal cost.
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Refer to Table 18.1. The opportunity cost of a hat in Russia is
A) 1/3 of a glove. B) 1/2 of a glove. C) 2 gloves. D) 3 gloves.
One advantage of fiscal federalism is that its decentralized nature _____
a. allows for more rigid rules b. gives voters more choice c. creates thousands of bureaucracies d. forces local governments to collude with one another
When a producer is operating efficiently it is producing:
A. the good in which it has an absolute advantage. B. at a point on or under its production possibilities frontier. C. at a point on its production possibilities frontier. D. only one good.
Which of the following describes the Volcker disinflation most accurately?
a. Almost all of the public believed that the Fed would keep money growth low, so unemployment rose less than it would have otherwise. b. Almost all of the public believed that the Fed would keep money growth low, so unemployment rose more than it would have otherwise. c. Much of the public did not believe that the Fed would keep money growth low, so unemployment rose less than it would have otherwise. d. Much of the public did not believe that the Fed would keep money growth low, so unemployment rose more than it would have otherwise.