Comparing a perfectly competitive market to a monopoly, which of the following is true?
A. Price will be higher and quantity will be lower in the perfectly competitive market than in the monopoly.
B. Price will be higher than marginal cost in the perfectly competitive market but will be equal to marginal cost in the monopoly.
C. Price will be equal to marginal revenue in the perfectly competitive market but will be higher than marginal revenue in the monopoly.
D. at that point on the market demand curve which intersects the marginal cost curve, the monopolist and the perfectly competitive firm will maximize profits.
Answer: C
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Government intervention can increase total welfare when
A) there are costs or benefits that are external to the market. B) consumers do not have perfect information about product quality. C) a high price makes the product unaffordable for most consumers. D) all of the above E) A and B only
Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are
a. complementary goods. b. normal goods. c. inferior goods. d. substitute goods.
Which of the following is NOT a common characteristic of oligopoly?
A. marginal cost pricing. B. barriers to entry C. strategic dependence among firms in the industry D. product differentiation