Show how a monopolist maximizes its profit. Explain your graph.
What will be an ideal response?
The student should draw a graph similar to Figure 7-2, indicating where the MR=MC point on the graph is to determine the monopolist’s output, price, ATC of the output, and the profits earned.
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The deadweight loss in a housing market with a rent ceiling set below the equilibrium rent is the
A) loss to those who cannot find apartments and the gain to landlords who charge black market rents. B) loss to those who cannot find apartments and the loss to landlords who cannot offer housing at the lower rent ceiling. C) loss to landlords and the gain to tenants who pay a fairer rent. D) loss to tenants and the gain to landlords who have the incentive to offer more apartments for rent. E) gain to landlords and to tenants because now a fairer rent is charged.
When you buy previously issued shares of Twitter stock, this transaction takes place in the
A) primary market. B) bear market. C) bond market. D) secondary market.
In the Friedman-Lucas money surprise model, a surprise increase in money supply growth
A) has no effect on inflation. B) increases inflation less than in proportion to the growth rate of the money supply. C) increases inflation in an equal proportion to the growth rate of the money supply. D) increases inflation more than in proportion to the growth rate of the money supply.
Capital goods yield benefits
A. over their life span. B. as soon as the investment decision is made. C. before they are put to use. D. in the present only.