Critically evaluate the following statement. "Monopolists are able to pass on the full amount of any increase in their fixed cost to the consumer in the form of higher prices."
What will be an ideal response?
This statement is false. Monopolists, like any firm operating in any other type of industrial structure, maximizes profit where marginal revenue equals marginal cost. Increased fixed costs do not change the point where marginal revenue equals marginal cost. Therefore, the firm will not find it profitable to increase price.
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Technological change
A) generates economic growth. B) shifts the PPF leftward. C) creates inefficiency. D) Both answers A and C are correct.
Using average cost pricing to regulate a natural monopoly creates a deadweight loss
Indicate whether the statement is true or false
What is the opportunity cost of producing capital goods such as a new road?
What will be an ideal response?
If interest rates in the U.S. are higher than elsewhere, it will cause
a. the demand for dollars to decrease b. the supply of dollars to increase c. the exchange value of the dollar in relation to other currencies to fall d. the dollar to depreciate e. the demand for dollars to increase