The proper level of government intervention is unclear when dealing with a monopoly
a. True
b. False
Indicate whether the statement is true or false
True
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Dorothy lives in a city with high air pollution. Pollution is a bad, but she is able to avoid air pollution by wearing a face mask. Her preferences are given by
U(q1,q2 ) = (q1 - P)2q22 where q1 is the amount of time she spends wearing a mask, P is the amount of pollution and q2 is a composite of other goods (p2 = 1 ). Dorothy must decide how much to wear a mask and how much q2 to purchase. The price of masks is pM. Assume q1* > P when answering this question. a. Derive Dorothy's demand for masks, q1*(p1,Y, P) b. How does the quantity of pollution affect the demand for masks? That is, find q1*/P. c. How does her income influence the quantity of masks she purchases? That is, find q1*/Y. d. What condition must hold for the assumption q1* > P to hold?
Perfectly competitive firms that earn an economic profit in the short run choose the output that
a. maximizes total revenue b. minimizes total cost c. maximizes the difference between total revenue and total cost d. maximizes the difference between total revenue and explicit cost e. maximizes the difference between total revenue and implicit cost
In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be:
a. positive. b. zero. c. negative. d. normal.
A good example of _________ is the merger between a steel firm and a cookware firm
a. a horizontal merger b. a vertical merger c. a conglomerate merger d. either a horizontal or conglomerate merger, depending on whether the oligopoly is balanced or unbalanced e. either a horizontal or conglomerate merger, depending on the market shares of the two firms