Monopolies can misallocate resources by restricting output in an attempt to raise prices and profits.
Answer the following statement true (T) or false (F)
True
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What is always true at the quantity where a firm's average total cost equals average revenue?
A) The firm's profit is maximized. B) Marginal cost equals marginal revenue. C) The firm breaks even. D) The firm's revenue is maximized.
Why does perfect competition guarantee a Pareto optimal distribution of goods between two people? Under perfect competition,
A) everyone has the same preferences. B) everyone faces the same prices. C) everyone consumes the same quantity of both goods. D) goods are homogeneous.
Which of the following statements are false?
a. b and d. b. Marginal cost is always rising. c. Marginal and average total costs are equal at the most efficient production level. d. The AFC and AVC curves do not cross. e. The AFC and ATC curves do not cross.
Say's Law refers to the concept that: a. increases in aggregate demand create unionization. b. demand creates its own supply
c. supply creates its own demand. d. flexible wages affect price levels.