The principal difference between economic profits for a monopolist and for a competitive firm is that:
a. monopoly profits create major problems of equity whereas competitive profits do not.
b. competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well.
c. monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not.
d. monopoly profits are usually larger than competitive profits.
b
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Suppose firms in a monopolistically competitive industry are currently earning short-run economic profit. In the long run, the demand curve facing each individual firm is likely to:
a. shift to the left and become flatter. b. shift to the left and become steeper. c. shift to the right and become flatter. d. shift to the right and become steeper. e. remain unchanged.
In a figure that shows a supply curve and a demand curve, producer surplus is the area
A) below the demand curve and above the market price. B) below the supply curve and above the market price. C) above the demand curve and below the market price. D) above the supply curve and below the market price. E) between the demand curve and the supply curve.
An economic explanation as to why individuals such as Bill Gates and LeBron James don't finish college is that:
A. the sunk cost of college is very high for them. B. the opportunity cost of college is very high for them. C. the benefits of additional college exceed the costs of additional college for them. D. the decision not to finish college is irrational.
The useful economic life of a machine depends most importantly on
a) the depreciation rate b) the interest rate c) the tax rate d) risk e) the marginal revenue produced by the machine