In principle, can a monopolist hold its monopoly power in the long run? Explain
What will be an ideal response?
Yes. Monopoly power exists in the long run when the market is closed to entry in some way. Barriers to entry include ownership to resources without close substitutes, economies of scale, government restrictions, licenses and patents, and regulations.
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Deadweight losses are the only potential cost associated with tariffs, which is why they are preferred to quotas
Indicate whether the statement is true or false
A tax on buyers shifts the demand curve and the supply curve
a. True b. False Indicate whether the statement is true or false
When an external cost exists that is NOT taken into account in the production of a product,
A) the level of output is too low, and the supply curve should shift to the right to account for the externality. B) the level of output is optimal, and there should be no change in the supply curve. C) the price of the product is too high, and production should be expanded to lower the price. D) the level of output is too high, and the supply curve should shift to the left to account for the externality.
If a Cournot duopolist announced that it will double its output,
A) it becomes the leader. B) the other firm does not view the announcement as credible. C) the other firm will shut down. D) the other firm will double output also.