Under a monopoly, resources are misallocated such that
A. too few resources are used by the monopoly, and too many are used elsewhere.
B. consumers are being forced to pay a price below the MC of the monopolist.
C. resources are being used as efficiently as possible only by the monopoly.
D. too few resources are used in other industries, and too many are used by the monopoly.
Answer: A
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When total revenue remain unchanged when there is a change in price, demand is
A) unit-elastic. B) inelastic. C) elastic. D) not related.
To close an inflationary gap through fiscal policy, the government should
a. decrease government spending in order to reduce aggregate demand. b. increase government spending and taxes in order to both increase aggregate demand and aggregate supply. c. decrease government spending in order to increase aggregate supply. d. reduce taxes in order to stimulate investment, and thus increase aggregate supply.
Which of the following statements is correct regarding the imposition of a tax on gasoline? a. The incidence of the tax always falls on the buyer
b. The incidence of the tax depends upon the price elasticities of demand and supply. c. The incidence of the tax always falls on the sellers. d. The oil company will ultimately pay.
Public goods are not free. If we need a fighter aircraft, we are obliged to give up something else that could have been provided with the resources used to make the aircraft. The opportunity cost of providing aircraft can be represented in the
a. paradox of thrift b. aggregate expenditure curve c. marginal propensity to consume d. innovation cycle e. production possibilities curve