Answer the following statements true (T) or false (F)
1) The managers of monopolies, monopolistically competitive firms, and dominant firms all use marginal analysis to determine the profit-maximizing quantity of production.
2) If at its production level, the manager of a firm with market power has a marginal cost of $1.25, is charging a price of $5.00 and has estimated the price elasticity of demand to be 1.3, the manager is charging the profit-maximizing price.
3) For a firm with market power, the profit-maximizing markup of price over marginal cost depends on the price elasticity of demand.
4) If there are very few substitutes for Frozen Super Paws Treats, the firm will have a smaller elasticity and less markup.
5) Barriers to entry create a deadweight loss for society.
1) TRUE
2) FALSE
3) TRUE
4) FALSE
5) TRUE
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