Which of the following statements is TRUE?
A) At the monopolist's equilibrium, resources are being efficiently allocated.
B) With a monopoly, the value to society of the last unit produced is less than it's production cost.
C) Monopolists raise the price and restrict production, compared to a competitive situation.
D) A monopolist always produces a higher level of output than would be produced if the market were competitive.
Answer: C
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If the U.S. Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of a(n)
A. supply-side fiscal policy. B. contractionary fiscal policy. C. expansionary fiscal policy. D. nondiscretionary fiscal policy.
The theories of economics, with surprisingly few exceptions, are extensions of which of the following assumptions about people?
A) People will do whatever earns them the most money. B) People will do whatever helps them to be "one up" on others. C) People will do whatever makes them popular. D) People will do whatever most effectively promotes the common good. E) People will do whatever yields them the largest net benefit.
An increase in the Consumer Price Index indicates that
a. the real income of households is increasing. b. the purchasing power of the dollar is increasing. c. the cost of buying the typical bundle of goods consumed by households is increasing. d. the real net worth of consumers is increasing.
If the risk on foreign government bonds increases relative to U.S. government bonds, the price of U.S. government bonds should:
A. increase as the demand for these bonds increases. B. decrease since people will bail out of all government bonds. C. not be affected because the two types of bonds are traded in different markets. D. not change since U.S. government bonds are free of default risk.