"All monopolies operate with positive economic profits." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. Monopolies can receive negative economic profits and can go out of business. If there is no price that lies above average total costs, the firm will receive negative economic profits. In the short run, it will continue to operate as long as price is greater than average variable cost, but it will go out of business in the long run.
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Monetary policy is conducted
A) only by the Federal Reserve. B) by the Federal Reserve and the President of the United States. C) by the Federal Reserve, the President of the United States, and Congress. D) by the Federal Reserve with veto power residing with the President of the United States.
Long-run economic profit does not exist for fixed factors like land because
A) bidding drives up the price of the factor until no economic profit exists. B) there is no market for such factors. C) these factors have L-shaped isoquants. D) these factors will earn economic profits.