In the short-run, a monopolistically competitive firm:
a. can earn only a normal profit.
b. will produce at the point where marginal revenue is greater than marginal cost, in order to maximize profits.
c. will produce at the point at which price equals minimum ATC, to maximize profits.
d. will charge a price equal to its marginal revenue.
e. will shut down temporarily if price is less than AVC.
e
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The lowest marginal tax rate used in the United States is
A. 10 percent. B. 28 percent. C. 33 percent. D. 39.6 percent.
Imagine two cities, Hometown and Visitorsville, where the rich, middle, and poor income recipients in one city have annual incomes identical to their counterparts' incomes in the other city. In Hometown, the poorest families one year almost always end up as the richest families the next year and become middle-income families the year after that. In Visitorsville, however, the poor remain poor and
the rich remain rich. Which of the following is true about the two cities? a. Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical. b. The degree of lifetime income inequality in the two cities is identical. c. The income mobility of people in the two cities is identical. d. The distribution of annual income is more unequal in Visitorsville.
Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA = 10 - QA, and the inverse demand curve for group B is PB = 18 - QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 2, and the monopolist has no fixed costs. If the monopolist
practices group price discrimination, the profit-maximizing prices charged to each type of customer are A) PA = 6, and PB = 10. B) PA = 4 and PB = 8. C) PA = 10, and PB = 6. D) PA = 8, and PB = 4.
If a profit-maximizing oligopolist has a kinked demand curve, a downward shift in its marginal cost curve:
A. increases output or price but not both. B. may not affect output or price. C. reduces output but not price. D. reduces both output and price.