In contrast to a monopoly which misallocates resources by restricting output and producing too little, government bureaus misallocate resources by _____
a. producing too little
b. producing too much
c. producing the right amount but charging nothing for the output
d. producing zero
b
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Use Figure 13.2 which depicts a monopolist firm to help with the following question. Define the area of total revenue that this firm will collect if it is maximizing profit. Use the letters that appear on the graph to identify the area
What will be an ideal response?
If in some production range average cost is rising, the firm is experiencing
A. increasing returns to scale. B. decreasing returns to scale. C. constant returns to scale. D. increasing costs per unit of output.
With perfect price discrimination, the firm faces a constant marginal revenue
a. True b. False
Which does an expanding economy NOT do?
A. Free up resources for the public sector B. Allow the middle class to enjoy more luxuries C. Create a lower real GDP D. Boost living standards for the poor