A major difference between a monopolist and a perfectly competitive firm is that
A. the monopolist charges the highest possible price that he can.
B. the monopolist's marginal revenue curve lies below its demand curve.
C. the monopolist is certain to earn economic profits.
D. the monopolist engages in marginal cost pricing.
Answer: B
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Purchases of inventories by
A) firms are not counted in investment spending. B) firms are also counted in investment spending. C) households are also counted in investment spending. D) households and Firms are also counted in investment spending. E) foreign consumers are counter in investment spending.
We assume that when a firm hires additional workers, the marginal physical product of labor will
A. increase because large firms are more efficient. B. decrease because each worker now has less capital and other resources to work with. C. increase because more workers can always get more work done. D. decrease because the new workers are likely to be less able than the previously hired ones.
The profits a corporation keeps to finance future expansion are known as
A) retained earnings. B) preferred stock. C) dividends. D) capital gains.