Explain why a monopolist does not have a supply curve
Any firm, including a monopolist, has cost curves. For competitive firms marginal cost dictates supply, since the firm produces where P = MC. But the marginal cost curve does not dictate monopoly supply. The monopolist produces at MR = MC, where MR depends on the position of demand. Hence, two monopolists with similar costs could charge completely different prices, depending on the demand for their products. A monopolist chooses a profit-maximizing level of output, but it does not really have a supply curve, which indicates a collection of price-quantity combinations that it is willing to supply.
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A) a 5 percent increase in people's income B) a 10 percent decrease in the price of car insurance C) a 20 percent increase in the price of a car D) an increased preference for walking rather than driving
Due to externalities generated by home landscaping, its price
A) is above the optimal level, and quantity that is below the optimal level. B) is below the optimal level, and quantity that is above the optimal level. C) and quantity traded are both above the optimal level. D) and quantity traded are both below the optimal level. E) must fall in order for the market to reach equilibrium.