If a perfectly competitive industry is taken over by a monopolist,
a. output will always rise
b. output will always fall
c. market price will probably not change
d. marginal cost will approach average variable cost in the long run
e. market price could fall if there are large gains from technological changes under monopoly
E
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An external effect that generates costs to a third party is called
a. free-ridership c. a negative externality b. a positive externality d. a marginal private cost
The price of a bus ride decreases, and the total revenue of the bus company decreases. The demand for bus rides is ________
A) perfectly elastic B) inelastic C) unit elastic D) elastic but not necessarily perfectly elastic
In the Keynesian view, a reduction in the marginal income tax rate would cause
a. output to rise and the price level to fall. b. both output and the price level to rise. c. output to rise with the price level unchanged. d. the price level to rise with output unchanged.
Based on the information above, video games have
a. A unitary elastic demand b. An inelastic demand c. An elastic demand d. A perfectly elastic demand