Lars is CEO of a large monopolistic firm. He looks at what is going on with revenues and pricing, and being knowledgeable about running a monopoly, he decides to reduce production. What does this tell us about his firm?
a. Marginal cost is equal to marginal revenue.
b. Marginal revenue is exceeding marginal cost.
c. Marginal cost is exceeding marginal revenue.
d. Marginal revenue is equal to price.
c. Marginal cost is exceeding marginal revenue.
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A firm experiencing constant returns to scale operates on the horizontal part of the:
a. long-run average total cost curve. b. marginal cost curve. c. marginal product curve. d. total product curve.
Economists make a distinction between changes in quantity demanded and changes in demand:
a) Because the demand curve shifts whenever there is a change in quantity demanded. b) To distinguish a surplus from a shortage. c) Because the supply curve shifts whenever there is a change in demand. d) To distinguish a movement along a demand curve from a shift of the demand curve.
When social costs of an activity exceed private costs
A) a market failure exists. B) there is a tendency for resources to be under-utilized. C) this means that resources are being efficiently used. D) the actual price is above the efficient price.
If ________ bargaining to resolve an externality is to result in an efficient outcome, the initial assignment of rights must be clear to ________ parties.
A. public; at least one B. public; only government-sponsored C. private; both D. private; at least one