Which of the following best explains why price in competitive price-taker markets will tend to be driven to the minimum average total cost?
a. homogeneous products.
b. few sellers.
c. firms face downward-sloping demand curves.
d. free entry and exit.
D
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Governments grant patents to encourage
A) low prices. B) firms to form public enterprises. C) research and development on new products. D) competition.
The long-run industry supply curve in perfect competition is derived from the
A. short-run industry supply curve which shifts as new firms enter the industry. B. short-run industry supply curve which shifts as old firms exit the industry. C. freedom of firms from sunk costs so that new cost curves become long-run curves. D. All of the reasons listed.
The Sherman Act outlawed practices that result in the restraint of trade.
Answer the following statement true (T) or false (F)
Draw a profit/price trade-off curve that results from moving from a competitive to a monopoly industry organization. Show the equilibrium position for the regulator with a political support function (PS curve). What can we say about prices and profits of the regulated industry if it started as a monopoly?
What will be an ideal response?