Answer the following statement(s) true (T) or false (F)
1. In both the short-run and the long-run, a monopoly is guaranteed to earn positive profits.
2. An excise tax will increase the deadweight loss due to monopoly, but an excise subsidy can reduce the deadweight loss.
3. An unregulated, profit maximizing monopoly will never set a price where demand is inelastic.
4. The large increase in the price of oil and in the total revenues and profits of the US oil industry in the 1990's are evidence that it was exercising monopoly power.
5. A monopoly's supply curve is the portion of its marginal cost curve that lies above its average variable cost curve.
1. False
2. True
3. True
4. False
5. False
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The market value of domestic production is equal to the total expenditure on domestic agents:
A) plus the expenditure of foreign agents on exports minus gross investment by the foreign firms. B) plus the expenditure of foreign agents on exports minus domestic expenditure on imports. C) plus domestic expenditure on imports. D) plus domestic expenditure on imports minus the expenditure of foreign agents on exports.
Use a graph to show the effects of a contractionary monetary policy to reduce inflation and move an economy back to potential real GDP. Explain what happens to aggregate demand, real GDP, and the price level
What will be an ideal response?
During the expansion phase of the business cycle
A) employment decreases. B) unemployment increases. C) production increases. D) income decreases.
_____ is the primary reason that explains why some nations are richer than the others
a. A democratic government b. A strong judicial system c. Access to education d. Private ownership e. A stable currency