Monopolies misallocate resources because
A) price does not equal marginal cost.
B) price does not equal average variable cost.
C) marginal cost does not equal average total cost.
D) profits are usually positive.
Answer: A
You might also like to view...
Refer to Figure 7.1. Suppose the city passes an ordinance banning loud music, and this directly impacts Angus's legal ability to play his bagpipes. In response to this ordinance, Angus agrees to pay Dudley to not call the police
What is the minimum amount that Angus would have to pay Dudley each day for Dudley to be indifferent about doing nothing or calling the police? A) $100 B) $200 C) $350 D) $550
If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold, what should the farm do to maximize its profit?
A) increase output B) decrease output C) lower its price to sell more D) determine what the total revenue and total cost of production are
Which of the following accurately contrasts consumption and investment?
a. Investment is a much larger component of aggregate demand than consumption. b. Consumption involves government purchases, whereas investment involves household purchases. c. Consumption includes purchases by households, whereas investment includes purchases by firms. d. Investment is more influenced by disposable income than is consumption.
The theory that there is no predictable trends in securities prices is the
A. capital reinvestment. B. present value. C. random walk theory. D. opportunity cost of capital.