Consider the purely competitive firm pictured above. The firm is earning:
A. normal profits since its price just covers ATC.
B. economic profits since its price is above AVC.
C. losses since it is operating at the shutdown point.
D. normal profits since its price is above AVC.
Answer: A
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For a monopolist, marginal revenue is
a. equal to price, as it is for a perfectly competitive firm. b. less than price, as it is for a perfectly competitive firm. c. equal to price, whereas marginal revenue is less than price for a perfectly competitive firm. d. less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.
Anchoring is a type of ______ bias.
a. compartmentalizing b. endowment c. framing d. marginal utility
The principal-agent problem in corporations arises from:
A. the view that workers are agents who are not considered to be the principal asset of the corporations for which they work. B. the fact that the principal objective of most corporations is to make profits and not to contribute to charity. C. a perspective that corporations are agents that represent the principal source of power for government and the national economy. D. a conflict of interest between corporate executives who manage the firm and stockholders who own the firm.
Explain the objective of the benevolent social planner
What will be an ideal response?