One of the conclusions of the model of monopoly is that the firm earns economic profits above the required opportunity cost of the factors of production. Are these profits lost to society? Do they take spending power from the economy, and act as a brake on economic growth?
No. The profits are "transferred" from the buyers of the good or service to the sellers. Therefore, the profits remain in the society at large, even though they have changed hands. (Presumably, sellers will spend the income, or save it, as effectively as others could.)
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Why is the labor market called a matching market?
Which of the following firms faces monopolistic competition?
a. A poultry farm selling eggs to different bakeries b. A fashion store selling clothes at an up-scale boutique c. A fruit-bowl shop at a local market d. A movie hall selling tickets in advance for an upcoming blockbuster
Other things constant, the quantity theory of money concludes that any increase in the quantity of money
What will be an ideal response?
Graphically, the effects of an external benefit can be shown as
A. a rightward shift of the market demand curve. B. a market demand curve that is to the left of the market demand that includes external benefits. C. a downward movement along the market demand curve. D. a leftward shift of the market supply curve.