Suppose a lazy monopolist's fixed costs are higher than the fixed costs of an efficient monopolist. In all other respects the monopolists are the same. Which of the following statements about this lazy monopolist is true?
A. It produces fewer goods than the monopolist producing efficiently.
B. It charges a higher price than the monopolist producing efficiently.
C. It sets price and quantity the same as the monopolist producing efficiently.
D. It charges a lower price than the monopolist producing efficiently.
Answer: C
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A) will increase. B) will decrease. C) will not change. D) may or may not change.
Which of the following is true? When there are no externalities, public goods, common resources, taxes or subsidies, then
i. allocative efficiency occurs when marginal benefit exceeds marginal cost by as much as possible. ii. an a competitive equilibrium, resource allocation is efficient. iii. fair rules require income transfers from the rich to the poor. A) only ii B) only i C) only iii D) i and ii E) i and iii
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Indicate whether the statement is true or false
When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of
a. substitution in consumption. b. substitution in production. c. a change in the marginal productivity of a resource. d. derived demand.