Question

At one time, monopolies were granted to people who were in the favor of kings and...

At one time, monopolies were granted to people who were in the favor of kings and queens.

a. True
b. False

The perfectly price-discriminating monopolist achieves resource allocative efficiency, while the single-price monopolist does not.

a. True
b. False

If a firm is earning an economic profit, it is earning an accounting profit, too.

a. True
b. False
Business   Economics   
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Homework Answers

Answer #1

1. Ans: True

Explanation:

Monopoly means single producer of a good. Kings and queens at one time gave monopoly power to those who are in their favor. Anyone who tries to compete with the monopolist, the king or queen fired or impresioned them.

Thus, the statement is true.

2. Ans: False

Explanation:

Allocative efficiency is achieved when Price = Marginal Cost. Allocative efficiency can achieved in a perfectly competitive market.

But in case of monopoly (both discriminating and single price monopoly) Price is always great than MC. So, allocative efficiency can not be achieved in case of monopoly.

Thus, the statement is false.

3. Ans: True

Explanation:

Accounting profit = Total revenue - Explicit costs

Economic profit = Total revenue - Explicit costs - implicit costs

So, If a firm is earning an economic profit, it means it is also earning an accounting profit.

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