Which of the following is TRUE?
A. Price discrimination guarantees that the monopolist will make a profit.
B. Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.
C. Monopoly results in a higher quantity of output being sold compared with perfect competition.
D. Charging all customers the same price when costs vary can actually be a case of price discrimination.
Answer: D
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Because the value of marginal product diminishes as the quantity of labor employed increases, the ________ the wage rate, the ________ workers the firm hires
A) lower; more B) higher; more C) lower; fewer D) None of the above answers is correct because there is no relationship between the wage rate and the number of workers hired.
Which of the following is an example of the law of demand?
A) A decrease in the price of milk is followed by an increase in milk purchases. B) A decrease in the price of milk is followed by a decrease in milk purchases. C) An increase in the price of milk has no effect on the amount of milk purchased. D) The amount of milk purchased increases when the price is constant.
If the demand for agricultural products is price inelastic and the supply is dependent upon weather conditions, then
A) price changes are likely to be small, and farm revenues are likely to be highly volatile. B) price changes are likely to be large, and farm revenues are likely to be highly volatile. C) prices are likely to be constant, and farm revenues are likely to be constant. D) prices are likely to be constant, and farm revenues are likely to be highly volatile. E) price changes are likely to be small, and farm revenues are likely to be constant.
Is equilibrium always at an optimal level of output? Explain your answer.
What will be an ideal response?