A profit-maximizing monopolist facing the situation shown in the graph below should:
A. Shut down in the short run
B. Continue producing to minimize losses
C. Continue producing to make economic profits
D. Continue producing as long as price is greater than marginal cost
A. Shut down in the short run
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An economy in which people exchange goods and services in a market is called a
A) command economy. B) socialist economy. C) market economy. D) centrally planned economy.
With a natural monopoly,
A) no regulation is necessary because it is a natural monopoly. B) regulation takes the form of forcing competition from new firms. C) regulation takes the form of forcing the company out of business. D) regulation can take the form of average cost pricing to allow coverage of costs. E) regulation takes the form of breaking the company into several competing firms.
The "invisible hand" using Adam Smith's terminology refers to:
a. "behind-the-scenes" policy making to influence how markets allocate scarce resources. b. market forces working through the price mechanism. c. the money supply that serves to keep the economy working smoothly. d. government control of the market. e. the role of innovation in maintaining a steady rate of growth.
A large farm uses fertilizer that nearby landowners complain may contaminate their water. Tests are conducted and contaminants are found. The costs resulting from this decision are referred to as
A) implicit costs. B) factor costs. C) external costs. D) opportunity costs.