The demand curve faced by a pure monopolist:
A. may be either more or less elastic than that faced by a single purely competitive firm.
B. is less elastic than that faced by a single purely competitive firm.
C. has the same elasticity as that faced by a single purely competitive firm.
D. is more elastic than that faced by a single purely competitive firm.
Answer: B
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Figure 10-2
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Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm. At its profit-maximizing level of output, the firm’s short-run TC is represented by area
A. ADFO. B. BGHC. C. BGIO. D. ADGIO.
In order for antitrust laws to raise social welfare, the government must
a. disallow synergy benefits from accruing to monopolists. b. disallow any mergers from taking place. c. be able to determine which mergers are desirable and which are not. d. always attempt to keep markets in their most competitive form.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Consider an antique auction where bidders have independent private values. There are two bidders, each of whom perceives that valuations are uniformly distributed between $100 and $1,000. One of the bidders is Sue, who knows her own valuation is $200. What is Sue's optimal bidding strategy in a Dutch auction?
A. Yell "mine" when the bid reaches $150. B. Submit a bid that is less than $150. C. Submit a bid of $150. D. Submit a bid of $200.