A profit-maximizing monopolist produces an output level that is allocatively inefficient because
a. price is greater than marginal cost
b. price is less than marginal cost
c. marginal revenue is greater than marginal cost
d. marginal revenue is less than marginal cost
e. consumers wish to purchase all that is produced
A
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Other things remaining the same, a right shift in the supply curve will lead to:
A) a decrease in the equilibrium price and an increase in the equilibrium quantity. B) an increase in the equilibrium price and the equilibrium quantity. C) an increase in the equilibrium price and a decrease in the equilibrium quantity. D) a decrease in the equilibrium price and the equilibrium quantity.
John’s Bait Shop was surprised to learn that when it raised prices by 10 percent, total revenue was unaffected. This is because the elasticity for bait is
A. unit elastic. B. inelastic. C. elastic. D. Not enough information is given.
When a monopolist chooses the level of output where marginal cost equals marginal revenue:
A. profits are maximized. B. price is set at marginal revenue. C. price is equal to average total costs. D. total revenue is maximized.
Which of the following is most frequently used when the Fed is attempting to adjust the money supply?
a. Changing reserve requirements b. Open market operations c. Changing the discount rate d. Moral suasion