Many people believe that a monopolist can set his own price which consumers have little recourse but to pay, and thereby reap enormous profits. Is this true?
A monopolist can set his own price for a good or service in the marketplace. However, a firm cannot make consumers purchase any particular quantity of a good. The monopolist is bound by the market demand curve. In order to sell more of output and increase total revenue, he will have to lower his price not only on the marginal units he wishes to sell, but also on all of the units. As a result, there is no guarantee that the best a monopolist could do, at the quantity where MR = MC, allows it to earn any economic profits.
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Which of the following statements is correct?
I. When economists derive the aggregate demand curve, they are looking at the effect of the price level on one commodity only. II. Any non-price-level change that increases total planned real spending on domestic goods shifts the AD curve to the right. A) I only B) II only C) Both I and II D) Neither I nor II
In the Keynesian causal chain, changes in GDP cause changes in the level of interest rates
a. True b. False Indicate whether the statement is true or false