The first-order conditions for a monopoly to maximize profits are:
A. d?(Q)/dQ = 0.
B. MR(Q) = MC(Q).
C. dR(Q)/dQ = dC(Q)/dQ.
D. All of the statements associated with this question are correct.
Answer: D
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What is market power?
What will be an ideal response?
A demand curve generally
a. is a straight horizontal line. b. is a straight vertical line. c. slopes downward to the right. d. slopes downward to the left.
Something that would cause the long-run aggregate supply curve to shift to the right would be:
A. technological advance. B. increase in the growth rate of the labor force. C. discovery of a new oil reserve. D. All of these would shift the long-run aggregate supply curve to the right.
Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes more shoes being produced when the price of leather increases. At the same time, a new production technology allowed for more shoes to be produced in less time. He has
A. confused association and causation. B. misunderstood the Ceteris paribus assumption. C. used normative economics to answer a positive question. D. built an untestable model.