At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist
a. is producing his profit-maximizing level of output.
b. could increase his profit by increasing his output.
c. could increase his profit by increasing his price.
d. should exit the market if he has positive fixed cost.
B
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If two simultaneous move Bertrand price competitors have different constant marginal costs, then any price between their marginal costs could be a Nash equilibrium price.
Answer the following statement true (T) or false (F)
What is one reason firms might lobby to prevent entry into their market?
A) The long run equilibrium might be characterized by P = MC = ATC. B) The long run equilibrium might be characterized by P = MC < ATC. C) The long run equilibrium might be characterized by P > MC = ATC. D) The long run equilibrium might be characterized by P = MC > ATC.
What is a problem with command-and-control policies?
a. It provides too much flexibility for firms to determine the best way to reduce their pollution. b. There are strong incentives to lower costs of reducing pollution. c. It is not the most efficient method for reducing pollution. d. There is strong agreement as to what are the correct policies.
Prohibiting price increases in situations of true scarcity could best be described as
a. interfering with the "law" of supply and demand. b. thwarting the "law" of increasing returns to scale. c. violating the "law" of increasing cost. d. interfering with the "law" of diminishing marginal utility.