Explain how a single-price monopoly determines its output and price. Compare this process to how a perfectly competitive firm determines its output and price
What will be an ideal response?
Single-price monopolies follow the same profit-maximizing rule as perfectly competitive firms and set their output level where marginal revenue equals marginal cost. However, unlike perfectly competitive firms, monopolies have control over price and can charge as much as the market will bear; therefore, given the quantity they produce, the monopoly chooses its price from the market demand curve.
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Use the data in the table below to answer the next question. The data describes a hypothetical economy and are denominated in billions of dollars.Disposable income$200Net private domestic investment40Value of imports15National income300Personal taxes31Net exports9Gross private domestic investment55Net foreign factor income10Statistical discrepancy0This nation's exports are ________.
A. $16 billion B. $24 billion C. $9 billion D. $28 billion
The authors note that the goal of maximizing the market value of the firm may be more appropriate than maximizing short-run profits because:
A) the market value of the firm is based on long-run profits. B) managers will not focus on increasing short-run profits at the expense of long-run profits. C) this would more closely align the interests of owners and managers. D) all of the above
Goods that are rival in consumption and excludable are:
A. a common resource. B. a private good. C. a public good. D. an artificially scarce good.
To obtain the market demand curve for a product, sum the individual demand curves
a. vertically. b. diagonally. c. horizontally. d. and then average them.