Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is a competitive price taker?
A. Marginal revenue and market price are equal for the competitive price taker but not for the monopolist.
B. The monopolist does not always produce the output that equates marginal cost and marginal revenue; the competitive price taker does.
C. The monopolist charges the highest price possible; the competitive price taker charges a price equal to its per-unit cost.
D. A monopolist can earn economic profit in the short run; a competitive price taker cannot.
Answer: A
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If the U.S. dollar becomes weaker in international foreign exchange markets, imported goods become more expensive. One result of this is that
A) domestic employment rises. B) net exports increase. C) real Gross Domestic Product (GDP) increases. D) net exports decrease.
If Brazil imposes a 50% tariff on automobiles and a 25% tariff on motors, the effective rate of protection on autos is
A) higher than the nominal rate of protection on autos. B) need more information to answer. C) lower than the nominal rate of protection on autos. D) equal to the nominal rate of protection on autos.
If A and B are two sets such that set A is a subset of B, and "Pr" represents the probability, then Pr(A and B) will be:
a. Pr[A]. b. Pr[B]. c. Pr[A-B]. d. Pr[A+B].
The difference between cost-of-service regulation and rate-of-return regulation is that
A) the former sets prices based on actual costs, and the latter focuses on setting prices such that the firm earns a normal rate of return. B) the latter sets prices first, and then the firm must keep costs in line if it wants to earn a profit, and the former sets price high enough to cover costs. C) the former uses marginal cost pricing and the latter uses average cost pricing. D) the former uses average cost pricing and the latter uses marginal cost pricing.