If a monopolist produces to a point at which marginal revenue is less than marginal cost then
A. profits will always be negative.
B. the incremental cost of producing the last unit is less than the incremental revenue.
C. profits are being maximized.
D. the incremental cost of producing the last unit exceeds the incremental revenue.
Answer: D
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Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?
A) D no change, S decreases, P increases, Q increases. B) D decreases, S no change, P and Q decrease. C) S decreases, D no change, P increases, Q decreases. D) D and S decrease, P and Q increase.
Improved labor skills contribute to growth of the economy by:
A. Increasing productivity. B. Raising savings rates. C. Raising investment rates. D. Replacing capital.
Suppose that the inverse demand for a downstream firm is P = 150 ? Q. Its upstream division produces a critical input with costs of CU(Qd) = 5(Qd)2. The downstream firm's cost is Cd(Q) = 10Q. When there is no external market for the downstream firm's critical input, the downstream firm should produce:
A. 14 units. B. 11.67 units. C. 12.5 units. D. 15 units.
In general, the market price in an oligopoly market is:
A. lower than in perfect competition. B. higher than in perfect competition. C. the same as in perfect competition. D. The answer depends on the shape of the average cost curve.