If the average total cost curve is always above the demand curve for a monopolist:
a. the profits of the monopolist will be large.
b. the monopolist must be producing inefficiently.
c. the monopolist will suffer economic losses.
d. entry will occur, forcing the monopolist to reduce price and expand output.
c
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Consider the following:
(i) Suppose a competitive industry has some factor of production whose supply is perfectly inelastic. As the demand for the industry's product rises and falls, what happens to the factor's employment and its rent? (ii) Repeat part i for the case where factor supply is perfectly elastic.
The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would tend to offset each other in trying to achieve that objective?
A. Selling government securities and raising the discount rate. B. Buying government securities and raising the discount rate. C. Buying government securities and lowering the reserve requirement. D. Selling government securities and raising the reserve requirement.
If the price elasticity of supply of television sets is constant and equal to 3, a 10 percent increase in price will result in a change in quantity supplied equal to
A) 3 1/3 percent. B) 30 percent. C) 1/3 percent. D) -30 percent.
Which of the following is the result of competing through advertising for a monopolistically competitive firm?
a. Long-run average costs shift downward. b. The firm's demand curve become flatter and shifts inward. c. The firm's demand curve keeps the same slope and shifts inward. d. Long-run average costs shift upward.