Why is price less than marginal revenue for a monopolist?
What will be an ideal response?
Consider the above figure. If the monopolist reduces its price from P1 to P2, its revenues increase by the area of the rectangle bcde. At the same time, however, its revenues decline by the area of the rectangle P1acP2. Marginal revenue is the difference between these two areas, which is less than the price of the one-unit change entailed in increasing output from Q to Q + 1. Thus, marginal revenue is less than price.
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For an inferior good, a decrease in demand is caused by
A) a rise in income. B) a fall in income. C) a rise in price. D) a fall in price.
Because education generates a positive externality, ______
A. everyone who wants a college education should get one B. graduates' marginal benefit exceeds the society's value of the educa-tion C. the quantity of education undertaken will achieve the social interest if it is free D. subsidies to colleges or vouchers to students are means of achieving the efficient number of graduates
By definition, an industry with high concentration also is highly competitive.
Answer the following statement true (T) or false (F)
Through specialization and international trade, a nation:
A. can attain some combination of goods lying outside its production possibilities curve. B. can move from a high consumption-low investment to a high investment-low consumption point on its production possibilities curve. C. will only attain some combination of goods lying within its production possibilities curve. D. will cause its production possibilities curve to shift leftward.