A monopoly sets its price such that demand for the good produced is ______
A. unit elastic
B. inelastic
C. elastic
D. either elastic or inelastic, but never unit elastic
C To maximize profit, marginal cost must equal marginal reve-nue. Marginal cost is positive, so to maximize profit marginal revenue must also be positive. Only when the demand is elas-tic is marginal revenue positive.
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One timing problem in using fiscal policy to counter a recession is the "legislative lag" that occurs between the
A. time the need for the fiscal action is recognized and the time that the action is taken. B. time fiscal action is taken and the time that the action has its effect on the economy. C. start of the recession and the time it takes to recognize that the recession has started. D. start of a predicted recession and the actual start of the recession.
According to classical growth theory, if labor productivity increases,
A) people save more, which increases the capital per hour even more, and so economic growth continues indefinitely. B) the population grows and eventually real GDP returns to the subsistence level. C) the population grows but more slowly than real GDP so that people's incomes are permanently higher. D) the pursuit of profit causes further increases in capital per hour and technology and economic growth continues indefinitely. E) the growth rate of real GDP per person permanently increases.
If you purchase a share of stock from your friend who initially purchased the stock three years ago, your purchase of the stock represents a transaction in the secondary financial market
Indicate whether the statement is true or false
The deadweight loss caused by a monopoly is the area:
a. between the demand curve and the marginal cost curve and between the profit-maximizing quantity and the efficiency quantity. b. between the demand curve and the marginal revenue curve and between the profit-maximizing quantity and the efficiency quantity. c. under the marginal revenue curve and between the profit-maximizing quantity and the efficiency quantity. d. under the marginal cost curve and the marginal revenue curve and between the profit-maximizing quantity and the efficiency quantity.