A profit-maximizing firm in a monopolistically competitive industry sells its product at a price:
A. that exceeds marginal cost.
B. that exceeds average variable cost.
C. equal to average variable cost.
D. equal to marginal cost.
Answer: A
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One company that retained its monopoly position for years through control of raw materials was
a. Aluminum Company of America (ALCOA). b. Procter & Gamble. c. Ford Motor Company. d. U.S. Steel.
When the government implements a price support program:
A. it may end up buying a lot of the good, for which it has little or no use. B. the goal is to increase the market price of the good. C. the deadweight loss created can be larger than that created by a price floor. D. All of these occur as a result of a price support program.
Oligopoly describes a market with:
A. many sellers. B. one seller. C. only a few sellers. D. few or many sellers, but only one buyer.
The presence of price controls in a market usually is an indication that
a. an insufficient quantity of a good or service was being produced in that market to meet the public's need. b. the usual forces of supply and demand were not able to establish an equilibrium price in that market. c. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. d. policymakers correctly believed that, in that market, price controls would generate no inequities of their own.