Because a monopolistically competitive market is characterized by
A. many small sellers selling a differentiated product, each seller has some influence over its own price.
B. a single seller of a product that has few suitable substitutes, the seller is a price maker.
C. many small sellers selling a differentiated product, one seller's change in price has a large effect on the market price.
D. a few sellers selling a differentiated product, each seller bases its decisions on the expected decisions of its rivals.
Answer: A
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A firm's accounting profit is measured as
A) operating expenses minus revenue. B) revenue minus operating expenses and taxes paid. C) revenue plus operating expenses minus taxes paid. D) net worth minus economic profit.
Explain why market power leads to a deadweight loss. Is the total deadweight loss from market power in the United States large or small?
What will be an ideal response?
When a monopolist maximizes its profit by selling a positive amount:
A. its marginal revenue must equal its marginal cost at that quantity. B. its marginal revenue must exceed its marginal cost at that quantity. C. its marginal revenue must be less than its marginal cost at that quantity. D. its marginal revenue must be equal to zero.
Under rate-of-return regulation, average cost pricing
A) is inflated so the firm can make economic profits. B) includes variable costs but not a cost for capital. C) includes what they consider to be a fair rate of return on investment. D) includes a cost for capital that generates an above normal rate of return.