1. A monopolist produces an efficient quantity of output but it is still ineffic
ID: 1207598 • Letter: 1
Question
1. A monopolist produces an efficient quantity of output but it is still inefficient because it charges a price that exceeds marginal cost and the resulting profit is a social cost. A. True B. False 2. The monopolist chooses the quantity of output at which marginal revenue equals marginal cost and then uses the demand curve to find the price that will induce consumers to buy that quantity A. True B. False 3. Using regulations to force a natural mosopoly to charge a price equal to its marginl A. True B. False 4. Because monopolistically competitive firms earn zero profits in the long run, deadweight loss will be eroded to zero as well. A. True B. False 5. The curve and the ATC curve A. True B. False long run in monopolistically competitive markets is a tangency between the MC 6. Consider the following payof matrix: Up Down a. d) For Up- Right to be the only Nash equilibrium, which of the following must be true? C. a>e, eg, b>d, th D. ea, og, bsd, hofExplanation / Answer
a. This is true. the monopolist charges a price higher than MC due to which there is deedweight loss in the economy and monopolist is not said to be efficient.
b. This is true. Monopolist revenue is maximised when Mr=MC and he charges a price higher than that.
c. True. It is not possible for monopolist to charge a price=MC and earn a profit.
d. False. Monopolistically competitive firms charge a price higher than Mc and hence their is dead weight loss and ineffeciency in the market.
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