Answer the following statement(s) true (T) or false (F)
1. We know that the producer's surplus accruing to a simple monopoly firm must be greater than operating in a competitive market, else firms would not act as monopolists.
2. In both the short-run and the long-run, a monopoly is guaranteed to earn positive profits.
3. An excise tax will increase the deadweight loss due to monopoly, but an excise subsidy can reduce the deadweight loss.
4. An unregulated, profit maximizing monopoly will never set a price where demand is inelastic.
5. The large increase in the price of oil and in the total revenues and profits of the US oil industry in the 1990's are evidence that it was exercising monopoly power.
1. True
2. False
3. True
4. True
5. True
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A firm operating at MC = MR must be making a profit.
Answer the following statement true (T) or false (F)
Why does the census data overstate inequality?
a. They overestimate the non cash transfers received by the people from the government. b. They take into account the after-tax incomes. c. They take into account the gifts and transfer receipts from friends and relatives staying abroad. d. They do not consider the in-kind transfers received by the people from the government. e. They overestimate the medical benefits received by the people from the government.
A . What kind of market failure is associated with goods that have negative externalities? b. How can the government intervene in free markets to correct the market failure associated with negative externalities?
?Devaluation of a domestic currency:
a. is also called revaluation
b. refers to an increase in a floating exchange rate
c. refers to a decrease in a floating exchange rate
d. refers to an increase in a fixed exchange rate
e. refers to a decrease in a fixed exchange rate