How does monopoly product quality compare to the quality a social planner would choose?
a. The monopolist targets the marginal consumer's valuation of quality, whereas the social planner targets the average consumer's. This leads the monopolist to make inefficiently low-quality products.
b. The monopolist targets the marginal consumer's valuation of quality, whereas the social planner targets
the average consumer's. This leads the monopolist to make inefficiently high-quality products.
c. There is no difference due to a standard neutrality argument.
d. None of the above.
d
You might also like to view...
Banks can obtain funds to make loans by borrowing reserves from other banks through the federal funds market
Indicate whether the statement is true or false
The United States and the United Kingdom are two major __________-oriented systems
A) securities B) equities C) banking D) markets
Which of the following is a major area of study for economists?
a. How countries choose national leaders b. The design of recycling water c. The best way to design a nature reserve d. How people make decisions
The demand for an input will be more inelastic when
A) the demand for the product being produced is elastic. B) the cost of the input is a relatively large percentage of total production costs. C) the time period being considered is relatively long. D) it is difficult to substitute other inputs for this input.