Question

TRUE OR FALSE

1.A pure monopolists is a price taker.

2. A firm must make normal profits to survive (stay in business) in the long run.

3. A union must recognize the trade-off between higher wages and the number of employed union members.

4. An effective response to falling gas prices would be a floor price on gasoline. .

5. An oligopolist cares very little about what other firms in its industry are doing.

7. Firms in monopolistic competition face a perfectly elastic demand curve.

8. Generally speaking, the larger the number of firms in an oligopolistic industry, the more difficult it is for those firms to collude.

9. Marginal utility is simply the additional utility or satisfaction derived from the consumption of one more good.

10. The more elastic the demand for a product, the more elastic will be the demand for the resources employed in producing that product.

11. Where economies of scale occur over a wide range of output, larger firms will be more efficient producers than smaller firms.

Answer 1

1) False A true monopolist is a price maker

2)True if firm doesnot makes a normal profit in long run then it will exit the market

3)True because increase in union wage will lead to less demand and thus less employment

4)False because price floor leads to excess of supply and there will be unsold inventories

5)False Oligopoly decisions are highly interdependent and thus it does effect what other firms are doing

7) False firm in monopolistic competition faces a downward sloping demand curve