A perfectly elastic demand curve implies that, ceteris paribus,
A. the price a firm charges is irrelevant, as it will sell the same amount regardless of the price charged.
B. a firm can sell more by lowering its price.
C. a firm can raise its price and not lose all its customers.
D. if a firm raises its price above the market price, quantity demanded will equal zero.
Answer: D
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Under what conditions might a monopoly be more efficient than a perfectly competitive firm?
What will be an ideal response?
Refer to Figure 13.1. All else equal, an increase in transfer payments would best be represented by a movement from
A) point A to point B. B) point B to point A. C) point B to point C. D) point C to point B.
The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, the consumer's net gain in surplus equals
A) c - f. B) b - f. C) d - f. D) The answer cannot be determined from the information given.
Both a perfectly competitive firm and a monopolist:
a. always earn an economic profit. b. maximize profit by setting marginal cost equal to marginal revenue. c. maximize profit by setting marginal cost equal to average total cost. d. are price takers.