What is the social cost of a monopoly? Explain
What will be an ideal response?
The social cost of a monopoly comes from the fact that, in order to maximize profits, the monopolist in the market charges a higher price and produces a lower output rate as compared to a perfectly competitive situation. As a result, consumers pay a price that exceeds the marginal cost of production, and the lower production rate represents a resource misallocation.
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Which of the following statements is correct?
I. The Fed can periodically and without warning examine member commercial banks to ensure that they are conforming to current banking standards. II. The Fed helps the government collect certain tax revenues and aids in the purchase and sale of government securities. A) I only B) II only C) Both I and II D) Neither I nor II
Suppose the price elasticity of demand for bouquets of flowers is 4.0. You are charging $8 per bouquet. If you want to increase the quantity of bouquets you sell by 20 percent, what price should you charge?
What will be an ideal response?
If a firm with a 20 percent market share merges with a firm with 5 percent of the market, by how much will the Herfindahl index change? The other firms have 40 percent, 15 percent, 10 percent, and 10 percent shares
a. It rises by 100. b. It rises by 200. c. It falls by 100. d. It falls by 200. e. It rises by 25.
For a competitive firm, the marginal cost curve
A. the short-run supply curve at all viable production levels b. shifts to the upward when new firms enter the market. c. shifts upward when wages decrease. d. is the short-run demand curve.