Author Question: Which of the following is true about a monopoly? a. A monopoly charges a higher price and produces ... (Read 53 times)

joesmith1212 · **on:** Jun 30, 2018

Which of the following is true about a monopoly?
a. A monopoly charges a higher price and produces a lower output level than if the market were competitive.
b. A monopoly is guaranteed an economic profit.
c. A monopoly charges the highest possible price.
d. A monopoly will shut down whenever losses are incurred.
e. All of these.

Question 2

When the price of a normal good falls, then:
a. both the income and substitution effects combine to cause the quantity demanded to increase.
b. the substitution effect will cause people to buy more because the good is relatively less expensive.
c. the income effect will cause people to buy more because of the increased purchasing power associated with the lower price.
d. all of these.