Refer to Figure 15-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the
A) area FGE. B) area FHE. C) area P1P2EF. D) area P1P2GF.
C
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Why are firms in monopolistic competition unable to make an economic profit in the long run?
What will be an ideal response?
Successful collusion requires all of the following except
a. a monopoly market with strong barriers to entry b. all firms cooperate, none cheat c. all firms belong to the same industry d. collusion will be more profitable than non-collusion e. the government does not interfere
If a regulatory commission imposes upon a nondiscriminating natural monopoly a price that is equal to marginal cost and below average total cost at the resulting output, then:
A. the firm will realize an economic profit. B. the firm will earn only a normal profit. C. allocative efficiency will be worsened. D. the firm must be subsidized or it will go bankrupt.
Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved?
A) I B) S C) Y/N D) all of the above E) none of the above