Refer to the graph shown. If the monopolist produces at the output level at which price equals marginal cost, it will:
A. maximize profits.
B. incur a loss.
C. earn zero profits.
D. earn positive profits but not maximum profits.
Answer: D
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In monopolistic competition, there is inefficiency because price is greater than marginal cost. What brings about this inefficiency?
A) high concentration, as indicated by the large concentration ratio B) product differentiation C) freedom of entry and exit D) marginal cost rises as more output is produced E) the fact there are many firms in the market
Macroeconomic equilibrium requires
A) equilibrium in the goods market. B) equilibrium in the money market. C) equilibrium in both the goods and money markets. D) equilibrium in neither the goods nor the money market.
U.S. auto workers sometimes experience structural unemployment because of the popularity of foreign cars. Which argument is a labor union most likely to present to Congress when it lobbies for trade restrictions?
a. national defense argument b. infant industry argument c. antidumping argument d. loss of domestic jobs argument e. declining industry argument
One of the differences between microeconomics and macroeconomics is the use of fiscal policy. Fiscal policy is conducted by:
a. local banks. b. a nation’s central bank. c. a nation’s legislative body. d. a state’s legislative body.