Refer to the above figure. Which of the following statements is TRUE?
A) Under perfect competition, the efficient price is charged, which is the lowest price possible (P1 ) while under monopoly output is too large (Q4 ) and price is too high (P4 ).
B) Under perfect competition price equals marginal cost (P3 ) while under monopoly price (P4 ) is greater than marginal cost (P1 ).
C) The rate of output is the same under both monopoly and perfect competition (Q1 ), but price is higher under monopoly (P4 rather than P1 ).
D) Price equals marginal cost under both monopoly and perfect competition, but output is too low under monopoly (Q1 instead of Q2 ).
B
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Which of the following goods is produced in a monopolistic competitive market?
a. Casual dining restaurants b. Electricity c. Apples d. Oil
Which of the following best explains why the Social Security system will face financial difficulties in the future?
a. Too much Social Security revenue was invested in the private sector rather than in government bonds. b. In the next two decades, the number of workers paying into the system will decline sharply relative to the number of retirees collecting benefits. c. The federal government does not pay interest on the money it borrows from the Social Security system. d. The funds in the Social Security trust fund were invested in high-risk ventures that failed to pay off.
The "lemons problem" in the used car market arises from
A) the difficulty U.S. producers have in making reliable cars. B) the difficulty buyers have in distinguishing good cars from lemons. C) the tendency of buyers of used cars to pay for them with bad checks. D) the reluctance of many car dealers to handle used cars.
The Kahneman-Tversky value function provides a rationale for
A. car dealers offering rebates rather than a price reduction on a car. B. paying cash rather than using a credit card. C. putting several Christmas gifts in one big box for your special friend. D. requiring employees to take all their vacation days in two weeks rather than taking scattered days throughout the year.