Question

Which of the following is not a difference between monopolies and perfectly competitive markets?

Select one:

a. Monopolies can earn profits in the long run while perfectly competitive firms break even.

b. Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.

c. Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.

d. Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

Comparative advantage means:

Select one:

a. the ability to produce more of a product with the same amount of resources than any other producer.

b. the ability to produce a good or service at a lower opportunity cost than any other producer.

c. the ability to produce a good or service at a higher opportunity cost than any other producer.

d. compared to others you are better at producing a product.

Corruption is similar to rent seeking activity when:

Select one:

a. a government bureaucrat uses an official car for personal business.

b. a firm pays a bribe in order to be awarded the monopoly cable television franchise.

c. a member of the legislature accepts a very large campaign contribution from an anonymous donor.

d. All of the above.

e. None of the above.

Answer 1

a) "C"

Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not. the perfeclty competitive firm will also produce at the long run equilibrium the MC and the MR will be equal.

b) "B"

The ability to produce a good or service at a lower opportunity cost than any other producer is called the comparative advantage of that goods for that good.

c) "B"

A firm pays to get a monopoly in the market.