Using a broad definition, a firm would have a monopoly if
A) it produced a product that has no close substitutes.
B) it does not have to collude with any other producer to earn an economic profit.
C) there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run.
D) it can make decisions regarding price and output without violating antitrust laws.
Answer: C
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Which of the following is an implication of the Coase Theorem?
A) Bargaining cannot lead to an efficient allocation of resources. B) Government intervention is not always necessary to solve externality problems. C) Negotiation leads to an efficient outcome if transaction costs are high. D) Taxation leads to an efficient allocation of resources regardless of who holds the property rights.
If a perfectly competitive firm sells 10 units of output at a market price of $5 per unit, its marginal revenue per unit is:
a. $5. b. $50. c. more than $5 but less than $50. d. less than $5.
Mike Miller is the town manager of Medfield, a town with 50,000 residents. At a recent town meeting, several citizens proposed building a large public swimming pool in the center of town for all of the residents to enjoy. A survey of all 50,000 residents revealed that the pool would be worth $50 to each of them. The cost to build the swimming pool is $1,000,000 . Which of the following is the
most efficient option? a. The pool should be built and paid for with donations collected from residents, as these donations should more than cover the cost of the pool. b. The pool should be built and paid for by the town government and paid for with a tax on the residents because all residents would benefit from it but some residents would not donate if they were asked. c. The pool should be built and paid for by the wealthiest ten percent of the residents. d. The pool should not be built because the social value does not exceed the cost.
When aggregate demand decreases, product prices, wage rates, and per-unit production costs are inflexible downward because of a:
A. interest-rate effect. B. ratchet effect. C. real-balances effect. D. foreign-purchases effect.