Refer to Market Diagram. What area represents the producer's surplus earned in the monopoly equilibrium?
The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.
a. Area A + C + F.
b. Area C + F.
c. Area C + D + F + G.
d. Area C + D + E.
c. Area C + D + F + G.
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A situation in which firms choose their best strategy given the strategies chosen by the other firms in the market is called
a. a competitive equilibrium. b. an open-market solution. c. a socially-optimal solution. d. a Nash equilibrium.
If the wage rate is fixed at a certain level, the:
A. labor supply curve is horizontal. B. labor supply is a straight upward sloping line. C. MP must be constant. D. labor supply will increase at an increasing rate.
For a monopolist to maximize profits, its
A. price equals marginal revenue. B. marginal revenue exceeds price. C. price equals average total cost. D. price exceeds marginal cost.
Suppose the demand for lawnmowers goes down when the price of gasoline goes up. We can say that these two goods are
A. complements. B. perfect substitutes. C. unrelated goods. D. substitutes.