Which of the following statements is true of a monopolist?
a. The firm charges the highest possible price.
b. The firm always earns a profit.
c. The firm might earn a profit in the long run.
d. The firm generates a larger consumer surplus than a perfectly competitive firm.
e. The firm is more production efficient than a perfectly competitive firm.
C
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If the government overcorrected in a situation of external costs a. More than the efficient amount of the good would end up being produced
b. Less than the efficient amount of the good would end up being produced. c. It would result in a welfare cost in that market that was bigger than the initial welfare cost. d. Both a and c are would result.
The efficiency wage theory argues that:
a. employers will try to keep wages from falling when the economy is weak or the business is having trouble, and employees will not expect huge salary increases when the economy or the business is strong. b. the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. c. if an employer reduces wages for all workers during economic downturn, then the best workers more likely to leave, while the least attractive workers are more likely to stay. d. those already working for firms are "insiders," while new employees, at least for some time, are "outsiders.".
Which of the following is a difference between collusion and competition? a. Collusion results in higher output, while competition results in lower output
b. Collusion occurs when there are many firms in the market, while competition occurs when there are a few firms of comparable size. c. Collusion results in lower prices, while competition results in higher prices. d. Collusion results in higher prices, while competition results in lower prices.
Why would a bumper crop be bad news for farmers?
A. Their crop has an inelastic demand and the resulting drop in price reduces their total revenue. B. Their crop has an elastic demand and the resulting drop in price reduces their total revenue. C. Their crop has an inelastic demand and the resulting drop in price raises their total revenue. D. Their crop has an elastic demand and the resulting drop in price raises their total revenue.