1-) Is a monopolist subject to any competitive pressures? Explain. Would an unre
ID: 1229749 • Letter: 1
Question
1-) Is a monopolist subject to any competitive pressures? Explain. Would an unregulated monopolist have an incentive to operate and produce efficiently? why or why not?2-)Are the following statements both correct? Are they inconsistent with each other? Explain.
a. "Firms will hire a resource only if they can make money by doing so."
b. "In a market economy, each resource will tend to be paid according to its marginal product. Highly productive resources will command high prices, whereas less productive resources will command lower prices."
Explanation / Answer
1-) Is a monopolist subject to any competitive pressures? Explain. They are normally not subject to competitive pressure because there normally is no other sellers. Would an unregulated monopolist have an incentive to operate and produce efficiently? why or why not? They would not. In this case, they produce a lower quantity and charge a higher price. 2-)Are the following statements both correct? Are they inconsistent with each other? Explain. a. "Firms will hire a resource only if they can make money by doing so." b. "In a market economy, each resource will tend to be paid according to its marginal product. Highly productive resources will command high prices, whereas less productive resources will command lower prices." These are both true statements. Firms in general will continue to add factors of production whether it is labor or capital as long as the marginal benefit of doing so exceeds the marginal cost. In other words, as more inputs are used to produce more efficiently, the price of the good can be raised to demand a higher price and make more revenue and profit. Hope this helps
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