In what ways, if any, do the demand schedules for a purely competitive firm and a pure monopolist differ? What significance does this have for the price-output behavior of each?
What will be an ideal response?
The competitive firm faces a horizontal demand schedule that means it has no control over the price of its product, but must accept the market price and make its output decisions accordingly. The monopolist faces the downward-sloping market demand curve since it dominates the market. Therefore, the monopoly firm must make simultaneous decisions about both the price and output levels in determining the profit-maximizing level of output. Unless it is able to be perfectly discriminating, the monopolist must realize that the marginal revenue is different from the price at each output level. Since the profit-maximizing monopolist is trying to equate marginal revenue (rather than price) with marginal cost, the firm has to estimate the impact that any change in output will have on its existing price and therefore, on marginal revenue. Once marginal revenue has been equated with marginal cost, the monopolist will produce that level of output, and charge the price (above marginal revenue) associated with that output.
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During 2014, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2013, real GDP was 105 billion and the population was 0.85 billion. In 2014, real GDP per person was
A) $128. B) $124. C) $135. D) $117.
Which statement(s) are most likely correct about supply?
a. A rise in price almost always leads to an increase in the quantity supplied of that good. b. A rise in price almost always leads to a decrease in the quantity supplied of that good. c. A fall in price almost always lead to an increase the quantity supplied. d. A rise in price almost always leader to an increase in the quantity demanded of that good.
Many believe that fairness calls for higher income taxes on the wealthy. Using one of the "Ideas for Beyond the Final Exam," explain how higher taxes on the wealthy will affect output
Goods that are not excludable are usually
a. higher priced than excludable goods. b. higher priced than rival goods. c. in short supply. d. free of charge.