"Because of rent seeking, a monopoly may end up making zero economic profit." Is the previous statement correct or incorrect? Why?
What will be an ideal response?
The statement is correct. Competition among rent seekers might cause the successful person striving to create a monopoly to pay so much in order to create the monopoly that, when taking into account the cost of creating the monopoly, the person makes only zero economic profit.
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Make use of the quantity equation to answer the following problem. If the Fed increases the money supply by 4%, velocity increases by 1%, and economic growth is 3%, by how much will the price level increase?
What will be an ideal response?
Keynesian economics refers to the perspective that the business cycle represents
A) equilibrium. B) disequilibrium. C) long-run macroeconomic fluctuations. D) short-run macroeconomic stability.
The entry of an additional firm into a market shifts the demand curve for the original firm to the left.
Answer the following statement true (T) or false (F)
In the long run, the main reason that a monopolist can earn positive economic profits while a perfectly competitive firm cannot is:
A. monopolists enjoy greater economies of scale. B. there are no barriers to entry in a perfectly competitive market. C. the monopolist faces an inelastic demand for its product. D. perfectly competitive firms face greater opportunity costs.