Which is a major criticism of a monopoly as a source of allocative inefficiency?
A. A monopolist fails to expand output to the level where the consumers' valuation of an additional unit is just equal to its opportunity cost
B. A monopolist has no incentive to produce efficiently, because even the inefficient monopolist can be assured of economic profits
C. A monopolist will always earns profits and that means that prices are too high
D. A monopolist has an unfair advantage because it can purchase labor at a lower price than competitive firms can
A. A monopolist fails to expand output to the level where the consumers' valuation of an additional unit is just equal to its opportunity cost
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
When the production of a good involves several inputs, an increase in the cost of one input will usually cause total costs to
A) rise more than in proportion. B) rise less than in proportion. C) remain unchanged. D) rise by the exact amount of the input price increase.
In a market supply and demand graph, the socially efficient outcome occurs
a. Where the private marginal benefits intersect with the social marginal costs b. Where the private marginal benefits intersect with the private marginal costs c. Where the social marginal benefits intersect with the social marginal costs d. Where the social marginal benefits intersect with the private marginal costs e. Where externalities are maximized
Suppose the market for grass seed is expressed as Demand: QD = 100 - 2p Supply: QS = 3p Price elasticity of supply is constant at 1. If the supply curve is changed to Q = 8p, price elasticity of supply is still constant at 1. Yet, with the new supply curve, consumers pay a larger share of a specific tax. Why?
What will be an ideal response?