A profit-maximizing monopolist
a. is just as socially efficient as a perfectly competitive firm in allocating resources to production since she, too, seeks the largest return on his investment.
b. produces an output level at which marginal utility exceeds marginal cost.
c. produces more output than a perfectly competitive industry.
d. always produces in the inelastic region of his demand curve.
b
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The deadweight loss of a tariff
A) is a social loss because it promotes inefficient use of national resources. B) is a social loss because it reduces the revenue of the government. C) is not a social loss because it merely redistributes revenue from one sector to another. D) is not a social loss because it is paid for by rich corporations. E) is not a social loss because it aids domestic consumers.
Explain why asymmetric information can cause the real interest rate to increase, and why increases in the real interest rate can actually make lending more risky for financial institutions
What will be an ideal response?
For each of the following cost functions, find MC, AC, and AVC
a. TC = 20,000 + 10 Q b. TC = 18,000 + Q + 0.2 Q2
Voluntary agreements may not be a feasible method to internalize an externality when
A) the dollar value of the externality is large. B) the externality is negative rather than positive. C) there are significant transaction costs. D) there are high taxes on the firms that cause the externalities.