Because unregulated natural monopolies earn economic profits greater than zero in the long run, but cannot attract new entrants into the industry:
A. government agencies often regulate the number of firms that compete against natural monopolies.
B. government agencies often regulate the price natural monopolies can charge.
C. natural monopolies often go out of business.
D. natural monopolies are outlawed.
Answer: B
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The marginal product of labor is the change in total product from a one-unit increase in
A) the quantity of labor employed, holding the quantity of other inputs constant. B) the quantity of capital employed, holding the quantity of labor constant. C) both the quantity of labor and the quantity of other inputs employed. D) the wage rate.
The transactions demand for money will increase when
A. nominal Gross Domestic Product (GDP) increases. B. nominal Gross Domestic Product (GDP) decreases. C. the price level falls. D. the rate of interest increases.
Explain what economists mean by full employment and why this rate of unemployment is not zero
What will be an ideal response?
Suppose a monopolist sells in two distinct markets. The demand and marginal revenue for the first market are given by P1 = 240 - 2Q1 and MR1 = 240 - 4Q1, respectively, where Q1 is the quantity demanded and P1 is the price paid by the first group. The demand and marginal revenue for the second market are given by P2 = 120 - Q2 and MR2 = 120 - 2Q2, respectively, where Q2 is the quantity demanded and P2 is the price paid by the second group. The monopoly's marginal cost is given by MC = 4/9 Q, where Q is the total output produced by the monopoly.
(i) How much does the monopoly supply in each market and what price does it charge? (ii) What is the common equilibrium value of marginal revenue and marginal cost? (iii) Use your answers to parts i and ii to calculate the elasticity of demand for each market.