Explain why monopolists do not achieve efficiency
Efficiency would be achieved by producing the quantity of output associated with the minimum point on
the monopolist's ATC curve. Monopolists produce less than this quantity of output, however, because their
goal is profit maximization, which they achieve by producing at the point where their marginal revenue
equals their marginal cost. That point is unrelated to minimum ATC.
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KFC raises the price of its grilled chicken. The price elasticity of demand for KFC grilled chicken is 0.8. What happens to the KFC's total revenue?
A) nothing B) It increases. C) It decreases. D) It becomes negative. E) It might change, but more information is needed to determine if it increases, decreases, or does not change.
The author of the book An Inquiry into the Nature and Causes of the Wealth of Nations is
A) Thorstein Veblen. B) Adam Smith. C) Milton Friedman. D) Alan Greenspan.