In general, monopolies decrease economic efficiency. But in the presence of detrimental externalities, is it possible for a monopoly to be more efficient than a competitive market? Why, or why not?
What will be an ideal response?
Yes. Detrimental externalities lead to inefficiently high production because marginal private cost exceeds marginal social cost. Monopolies reduce production and charge prices above marginal private cost. Theoretically, if the monopoly price is closer to marginal social cost than the competitive market price, the monopoly can reduce inefficiency.
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A) 1.02% B) 2.29% C) 4.46% D) 9.78%
When an economy is operating inside its production possibilities frontier, we know that
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Esther and Albert produce hamburgers and hot dogs. Esther can produce six hamburgers per hour or four hot dogs per hour. Albert can produce three hamburgers per hour or one hot dog per hour. Based on the scenario, Esther's opportunity cost for one hamburger is:
a. 2/3 hot dog. b. 1 hot dog c. 6 hot dogs d. 4 hot dogs e. 8 hot dogs
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A. more; appreciation B. fewer; appreciation C. more; depreciation D. fewer; depreciation