Which of the following statements about a monopolist is TRUE?
A. All monopolies are unlawful in the United States.
B. Monopolies tend to supply goods at lower prices than those charged by firms in perfect competition.
C. Monopolies will always make a profit in the long run.
D. Monopolies tend to misallocate resources.
Answer: D
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Refer to Exhibit 9-7. Which point is representative of the economy experiencing labor market surpluses?
Economic profit is ________
A) included in the firm's total opportunity cost B) equal to normal profit minus total opportunity cost C) equal to total revenue minus marginal cost D) equal to total revenue minus total opportunity cost
There are two types of worker, high ability and low ability. High-ability workers generate gross profit of A on the job and low-ability generate nothing. Education does not make workers more productive, but is costly to obtain (cH for high ability workers and cL for low ability ones). Let w be the wage that all firms in the economy pay by regulatory mandate. Suppose the worker obtains utility
given by the wage (if the worker is employed, 0 if not) minus the cost of education (if any). There is no disutility from work. Which condition is required if only the high-ability type is to obtain an education in equilibrium? a. cH < w < cL. b. cL < w < cH. c. cH < cL < w. d. cL < cH < w.
If multiplier effects are ____ than policy makers expect or the natural rate of real output is _____ than expected, monetary policy will tend to overshoot its intended effects
a. Greater; greater. b. Greater; less c. Less; greater d. Less; less