Several firms want to be the only horse carriage service in a small tourist town and must pay the city for a license to operate as a monopoly. Competition among the potential firms will result in
A) bidding up the price of the license so that the winning firm makes $0 economic profit.
B) the winning firm making an economic profit because it will be a price maker.
C) the winning firm making an economic profit because it will have no competition.
D) the winning firm making an economic profit because rent seeking cannot occur.
E) a $0 economic profit because monopolies are illegal.
A
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Holding all other things constant, a higher price for ski lift tickets would
a. increase the number of skiers. b. increase the price of skis. c. decrease the number of skis sold. d. decrease the demand for other winter recreational activities.
One of the defining characteristics of a perfectly competitive market is
a. a small number of sellers. b. a large number of buyers and a small number of sellers. c. a similar product. d. significant advertising by firms to promote their products.