In principle, can a monopolist hold its monopoly power in the long run? Explain
What will be an ideal response?
Yes. Monopoly power exists in the long run when the market is closed to entry in some way. Barriers to entry include ownership to resources without close substitutes, economies of scale, government restrictions, licenses and patents, and regulations.
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Game theory is not useful in understanding perfect competition because in a perfectly competitive market:
A. there are too many firms to be able to model their behavior accurately using game theory. B. the payoffs to firms' choices are unknown. C. each firm only cares about its own profit, so there is no interdependence. D. no single firm can influence the market price, so firms' decisions are not interdependent.
A firm in monopolistic competition is similar to a firm in perfect competition because they both
A) can earn only zero economic profit in the long run. B) can earn only zero economic profit in the short run. C) maximize their profits by producing where P = MR = MC. D) Both answers A and C are correct. E) Both answers B and C are correct.
When measured as a percentage of GDP, the U.S. national debt reached its highest levels as a result of:
a. World War II. b. the Vietnam War. c. the Bush economic recovery program. d. the Reagan defense buildup and tax cut.
An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock. B. negative supply side shock. C. positive demand side shock. D. positive supply side shock.