For a single-price monopolist, marginal revenue falls faster than price (as output rises) because
A) the firm has no supply curve.
B) in order to sell additional units, the price must be lowered on all units.
C) the cost of producing extra units of output increases as production is increased.
D) profits are maximized when marginal cost equals marginal revenue.
E) none of the above — marginal revenue does not fall faster than price.
Ans: B) in order to sell additional units, the price must be lowered on all units.
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A free market is a market:
A) that has price controls imposed by a ruling authority. B) where almost all exchanges take place involuntarily. C) where determination of equilibrium quantity is free from the forces of demand and supply. D) that operates with little or no government control.
In monopolistic competition, each firm supplies a small part of the market. This occurs because
A) there are barriers to entry. B) there are no barriers to exit. C) there is a large number of firms. D) firms produce differentiated products. E) there is a large number of buyers.
The opportunity cost of taking a semester-long economics class is
A) the cost of tuition and fees only. B) equal to the highest value of an alternative use of the time and money spent on the class. C) the value of the time spent in the classroom. D) the knowledge and enjoyment you receive from attending the class. E) zero because there is no admission charged if you are enrolled in the course.
Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result
A) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. B) aggregate demand will increase by 2.5%. C) the purchasing power of wages will rise if wages increase by 2.5%. D) the short-run aggregate supply curve will shift to the left as wages increase.