Briefly explain how the term “price maker” is related to monopolies.
What will be an ideal response?
In monopoly, the firm and “the industry” are one and the same. Consequently, the firm sets the price of the good because the firm faces the industry demand curve and can pick the most profitable point on that demand curve. Monopolists are price makers (rather than price takers) that try to pick the price that will maximize their profits.
You might also like to view...
Everything else held constant, if a central bank makes a sterilized sale of foreign assets, then the domestic currency will
A) appreciate. B) depreciate. C) either appreciate, depreciate, or remain constant. D) not be affected.
Noncontrollable expenditures are called "noncontrollable" because
A) they increase at the same rate as the public debt. B) they change without congressional action. C) only the president can approve these entitlement payments. D) the political process determines the size of the payments.
One reason that firms will experience decreasing returns to scale is:
A. the law of diminishing marginal returns. B. the specialization of inputs as scale increases. C. there is some fixed input that isn't being taken into consideration. D. larger firms may be easier to manage effectively.
Neither monetary policy nor any government policy can change the natural rate of unemployment
a. True b. False Indicate whether the statement is true or false