Profit-maximizing firms want to maximize the difference between
A) total revenue and marginal cost.
B) total revenue and total cost.
C) marginal revenue and marginal cost.
D) marginal revenue and average cost.
B) total revenue and total cost.
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In our study of monopoly, we found that monopolists can increase profit by segmenting the market and price discriminating (under third degree price discrimination). Now suppose a firm is producing an excludable local public good. Can you justify a form of such market segmentation and price discrimination as efficient?
What will be an ideal response?
In economic theory, if an additional worker adds less to the total output than previous workers hired, it is because
A) there may be less that this person can do, given the fixed capacity of the firm. B) he/she is less skilled than the previously hired workers. C) everyone is getting in each other's way. D) the firm is experiencing diminishing returns to scale.
Transfer payments are:
a) excluded when calculating GDP because they only reflect inflation. b) excluded when calculating GDP because they do not reflect current production. c) included when calculating GDP because they are a category of investment spending. d) included when calculating GDP because they increase the spending of recipients.
Which would be a qualification to the view that oligopoly is allocatively and productively inefficient?
A. Oligopolies may purposely keep prices below short-run profit-maximizing levels to bolster barriers to entry. B. Less foreign competition has stimulated more price competition in oligopolies. C. The more collusive practices of oligopolies lead to more profit-sharing among firms in the industry. D. Oligopolies are less technologically competitive so they lose market share.