Profit regulation is desirable because if a firm is permitted a specific profit rate, it has an incentive to limit costs.
Answer the following statement true (T) or false (F)
False
If a firm is permitted a specific profit rate (or rate of return), it has no incentive to limit costs. On the contrary, higher costs imply higher profits. If permitted to charge 10 percent over unit costs, a monopolist may be better off with average costs of $6 rather than only $5.
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The production possibilities frontier represents the boundary between attainable and unattainable prices of commodities
a. True b. False
Refer to Figure 7.6. Which graph represents constant returns to scale?
A. A
B. B
C. C
D. Both graph A and graph C
The sale of goods abroad at a price below their cost and below the price charged in the domestic market is called
A) priming. B) coping. C) invading. D) dumping.
Which will not cause the supply curve to shift?
a. A change in the prices of other goods b. A technological change c. A change in the price of the good d. A change in resource costs