Amanda inherited the only local cable TV/Internet company in town after her father passed away. The company has a local monopoly on the delivery of high-speed Internet service. The company is completely unregulated by the government and is therefore free to operate as it wishes. Assume that Amanda understands the true power of her new monopoly. Which of the following statements is (are) correct?
(i) She will be able to set the price of high-speed Internet service at whatever level she wishes. (ii) The customers will be forced to purchase high-speed Internet service at whatever price she wants to set. (iii) She will be able to achieve any profit level that she desires.
a. (i) only
b. (ii) only
c. (i) and (iii) only
d. (i), (ii), and (iii)
a
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Aggregate demand is the sum of total domestic spending by the private sector
a. True b. False Indicate whether the statement is true or false
In voluntary exchange, if the seller of a product gains,
a. the buyer will generally lose an amount greater than the gain to the seller. b. the buyer must lose an amount equal to what the seller gains. c. someone else must lose an equal amount. d. the buyer must also gain; mutual gain provides the foundation for exchange.
John is trying to decide how to divide his time between his job as a stocker in the local grocery store, which pays $7 per hour for as many hours as he chooses to work, and cleaning windows for the businesses downtown. He makes $2 for every window he cleans. John is indifferent between the two tasks, and the number of windows he can clean depends on how many hours he spends cleaning in a day, as shown in the accompanying table.Time cleaning windows (hours/day)Total number of windows cleaned0017211314416517 What is the lowest price per window that John would be willing to accept to spend 4 hours per day cleaning windows?
A. $3.50 B. $7 C. $2 D. $11
Which of the following best describes why a perfectly competitive firm will sometimes continue producing in the short run even if it incurs a loss?
A. As long as price exceeds average variable cost, the loss from producing will be smaller than the loss from shutting down, which is equal to the amount of total fixed costs. B. Short-run losses turn into long-run profits when there is entry into the market. C. A perfectly competitive firm should never produce if it incurs a loss because it is unable to influence the market price. D. If price exceeds average total cost, the loss from covering the fixed costs will be smaller than the loss from covering the variable costs.