A monopolist maximizes profits by setting the quantity where:
A. marginal revenue is equal to marginal cost.
B. marginal revenue is greater than marginal cost.
C. marginal revenue is less than marginal cost.
D. total revenue is as high as possible.
Answer: A
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Suppose the country of Maverick has specialized in the production of a good but has not yet entered into trade. At this point in time, Maverick has
A. Moved to a level of consumption outside its production possibilities curve. B. Moved along its existing production possibilities curve. C. Moved to a level of production outside its production possibilities curve. D. Shifted its production possibilities curve outward.
The goldsmith's ability to create money was based on the fact that:
A. consumers and merchants preferred to use gold for transactions, rather than paper money. B. the goldsmith was required to keep 100 percent gold reserves. C. withdrawals of gold tended to exceed deposits of gold in any given time period. D. paper money in the form of gold receipts was rarely redeemed for gold.
If the price of a product increases, then
A. the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, increases. B. the budget line shifts inward and the optimal quantity demanded, which corresponds to the higher price, increases. C. the budget line shifts outward and the optimal quantity demanded, which corresponds to the higher price, decreases. D. the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, decreases.
The "active antitrust perspective" in policy enforcement strongly espouses the following beliefs, except:
A. Firms occasionally use illegal tactics to gain over competitors B. Antitrust authorities must act like officials in a football game C. Competition and creative destruction could lead to monopolies D. When competition is insufficient, allocative inefficiencies will occur