"The social cost of a monopoly comes from the fact that it charges a price higher than what consumers are willing to pay." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. The social cost of a monopoly comes from the fact that it charges a price higher than the market clearing price under perfect competition. The monopoly is able to sell at a higher price by producing a smaller quantity than in a perfectly competitive situation. As a result, resources are misallocated.
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Firms that populate the monopolistically competitive market are not price takers but price makers
Indicate whether the statement is true or false
Fundamental analysis shows that stock in Johnson's Lumber Company has a price that is less than its present value
a. This stock is overvalued; you should consider adding it to your portfolio. b. This stock is overvalued; you shouldn't consider adding it to your portfolio. c. This stock is undervalued; you should consider adding it to your portfolio. d. This stock is undervalued; you shouldn't consider adding it to your portfolio.