"The social cost of a monopoly comes from the fact that it charges a price higher than what consumers are willing to pay." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. The social cost of a monopoly comes from the fact that it charges a price higher than the market clearing price under perfect competition. The monopoly is able to sell at a higher price by producing a smaller quantity than in a perfectly competitive situation. As a result, resources are misallocated.
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The law-making time lag is best described as the time that it takes
A) a jury to render a verdict. B) Congress to realize that new laws must be passed to change taxes or spending. C) the President to sign a bill sent from Congress. D) a newly passed law to become the norm in daily lives. E) Congress to pass laws needed to change taxes or spending.
If preferences are transitive, indifference curves
A) intersect at the optimum consumption bundle. B) do not intersect. C) intersect where the marginal rate of substitution for each indifference curve is equal. D) intersect at the equilibrium consumption bundle.
Suppose that a small business takes in monthly revenue of $100,000 . Labor, rental, energy, and other purchased input costs are $70,000 . The owner/entrepreneur could earn $5,000 per month in another job, and the owner/entrepreneur could get a return of $5,000 each month if she sold her business and invested the net proceeds in a financial asset, such as a treasury bond. Which of the following
correctly describes her monthly economic profit? a. $100,000. b. $90,000. c. $70,000. d. $30,000. e. $20,000.
Fixed exchange rates allow countries to formulate their economic policies independent of other nations
a. True b. False Indicate whether the statement is true or false