Monopoly is a prime example of a market failure that leaves potential Pareto improvements unexploited. This is demonstrated by the fact that
a. monopolies produce public goods rather than private goods
b. monopolies substitute excludability for rivalry
c. monopolies substitute rivalry for excludability
d. the price in a monopolized market is less than the marginal cost of production
e. the price in a monopolized market exceeds the marginal cost of production
E
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Adverse selection is a situation in which one party to an economic transaction has less information than the other party
Indicate whether the statement is true or false
Protectionist policies often seek to shield domestic producers and domestic workers from ________ competition.
a. foreign b. local c. domestic d. unfair
A market is contestable if
a. the number of firms is larger than oligopoly. b. firms spend a lot on advertising. c. there is free entry and exit. d. firms have kinked demand curves.
Your business has these annual costs: rent, $30,000; raw materials, $50,000; insurance, $5,000; sales commissions, $25,000. Your total revenue is $100,000. What will you do in (a) the short run? (b) the long run?
What will be an ideal response?