Answer the following statement(s) true (T) or false (F)
1. A competitive industry is a viable alternative to a natural monopoly.
2. Patents have ambiguous welfare consequences because they both create monopoly power and promote inventive activity.
3. The competition among firms to acquire the rights to legal barriers to entry helps to reduce the welfare costs of monopoly.
4. Social gain is lowered when a monopoly begins to practice price discrimination.
5. When a simple profit-maximizing monopoly begins to practice second-degree price discrimination, both consumers and the monopoly will benefit.
1. False
2. True
3. False
4. False
5. True
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If the price of used cars rises, then the CPI will ________ and the GDP deflator will ________
A) increase; increase B) increase; not change C) not change; increase D) not change; not change E) increase; increase by more than the CPI
Which of the following statements accurately characterizes pre-1820 wages?
a. Skilled workers in England received higher wages than U.S. skilled workers. b. The wage premiums paid to skilled workers in the U.S. were typically greater than those paid in England. c. Early immigration of primarily skilled workers tended to reduce the wages of skilled labor in the U.S. d. The pull on unskilled labor to enter agricultural pursuits led to lower wages for unskilled workers in the manufacturing sector.
When the price of a resource goes up and firms seek other suitable resources, this is called the
a. substitution in production effect. b. substitution in demand effect. c. elasticity effect. d. inelasticity effect.
An economic model:
A. is so abstract that it cannot be applied to real-world events. B. applies economic theory to understand real-world events. C. is an action taken to influence the course of economic events. D. can be used only to understand free markets.