A monopolist finds the output (Q*) rate that maximizes profit. It finds the price by
A. taking the height of the demand curve at output rate Q*.
B. taking the height of the marginal revenue curve at output rate Q*.
C. taking the height of the marginal cost curve at output rate Q*.
D. setting price equal to marginal cost.
Answer: A
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Money neutrality is violated in which model?
a. new Keynesian model. b. monetarist model. c. real business cycle model. d. classical model. e. both c and d.
Why is a monopoly inefficient?
What will be an ideal response?
Assume a firm has the following cost and revenue characteristics at its current level of output: price=$8.00 . average variable cost=$6.00 and average fixed cost =$4.00 . In the long run, the firm
a. Should shut-down as its making a loss of $2 b. Should continue operating as long as it is covering the variable costs of $6 c. Should continue operating as long as it is covering the fixed costs of $4 d. Should not shut down
If U.S. monetary authorities want to strengthen the dollar, they will
a. sell dollars in the foreign exchange market b. buy dollars in the foreign exchange market c. declare the dollar devalued d. sell dollars and buy only Euros in the foreign exchange market e. encourage other central bankers to sell dollars in the foreign exchange market