A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?
A. Raise price and lower output.
B. Lower price and lower output.
C. Raise price and raise output.
D. Lower price and raise output.
Answer: A
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The conclusion that the economy has price flexibility, wage flexibility, and perfectly competitive markets justifies
A) rational policy making. B) passive policy making. C) active policy making. D) none of the above.
Mouthwash is sold in 24 oz bottles for $2.40 and in 12 oz. bottles for $1.20. This represents
A) price differentiation. B) price discrimination. C) marginal cost pricing. D) None of the above.
In the long run, equilibrium positions that arise in both monopolistically competitive and perfectly competitive markets are
A) MR = MC and P = MC. B) P = ATC and P = MC. C) MR = MC and P = ATC. D) MR = MC = P.
When is the definition and enforcement of property rights especially difficult?
a. when many polluters harm a large group of people by emitting the same pollutant b. when a single polluter is harming a single person or entity c. when land is owned by a corporation d. when the benefits of prosecution are clear