Which of the following is true of a monopolist in the short run?
A. It is constrained by marginal cost in setting price.
B. It is constrained by consumer demand in setting price.
C. It charges more than what consumers are willing to pay.
D. It always earns an economic profit.
E. It can charge whatever price it wants.
Answer: B. It is constrained by consumer demand in setting price.
You might also like to view...
Using forward transactions allows
A) holders of common stock to lock in future dividend payments. B) the federal government to stabilize fluctuations in tax receipts. C) corporations to reduce problems arising from future fluctuations in their dividend payments. D) both buyers and sellers to reduce risks associated with price fluctuations.
A meditation class meets on the second floor of a building; the first floor is a nightclub. The loud music from the club disturbs the classes. The club could be soundproofed for a cost of $5,000 or move at a cost of $8,000 . The class can't soundproof enough to overcome the music, but could be moved for $4,000 . According to Coase, a socially optimal solution can be achieved if
a. the local government purchases the building b. the building is torn down c. property rights to be noisy are granted to the nightclub d. property rights to a quiet environment are granted to the meditation class e. both the nightclub and the meditation class relocate