What is the relationship between price, marginal revenue, and marginal cost when a single-price monopoly is maximizing profit?
What will be an ideal response?
MR < P for every level of output. A profit-maximizing monopoly firm produces the amount of output that sets MR = MC. As a result, MC must be below price: MC = MR < P.
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Refer to Figure 19-4. The equilibrium exchange rate is originally at A, $3/pound. Suppose the British government pegs its currency at $4/pound
Speculators expect that the value of the pound will drop and this shifts the demand curve for pounds to D2. If the government abandons the peg, the equilibrium exchange rate would be A) $4/pound. B) $3/pound. C) $2/pound. D) less than $2/pound.
If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one. Which is the exception?
a. an increase in the number of new apartment complexes being built b. long waiting lists for apartment seekers c. lower maintenance of existing apartments d. conversion of some apartment complexes to condos e. a shortage
James has a comparative advantage in the production of corn, while Harry has a comparative advantage in the production of bread. If James and Harry decide to trade with each other, _____
a. both Harry and James will enjoy gains from trade b. only Harry will enjoy gains from trade c. only Harry will suffer losses from trade d. only James will suffer loses from trade e. neither of them will gain from trade