Author Question: Marginal cost is calculated for a particular increase in output by A) dividing the change in ... (Read 163 times)

sam.t96

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Marginal cost is calculated for a particular increase in output by
 
  A) dividing the change in total cost by the change in output.
  B) dividing the total cost by the change in output.
  C) multiplying the total cost by the change in output.
  D) multiplying the change in total cost by the change in output.

Question 2

U.S. antitrust laws are designed to prohibit monopolization and encourage competition. Why, then, does the government erect barriers to entry and create monopoly power by granting firms patents?
 
  What will be an ideal response?

Question 3

In theory, in the long run, monopolistically competitive firms earns zero profits. However, in reality there are some ways by which a firm can avoid losing profits. Which of the following is one such way?
 
  A) find a market niche and keep it as narrow as possible so as to prevent other producers from entering this market segment
  B) gradually increase the mark-up on the goods produced
  C) identify new markets and develop products precisely for those markets
  D) lower the price of its products to expand its market share


cdmart10

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Answer to Question 1

A

Answer to Question 2

Patents are designed to encourage creative activity and promote the development of new technologies. Firms can spend years on research and development in the search for new and better production processes and consumer products. Research and development is costly - many potential new ideas are ultimately not technically feasible or never become commercially successful. If research and development results in a successful product, competing firms can easily copy the product and sell it without incurring the research costs of the firm that developed the product, if patent protection is not granted. Most people would object to this form of free riding on equity grounds; but patents also encourage firms to conduct research that leads to social benefits: new technologies result in a higher standard of living for all and a more efficient allocation of society's scarce resources.

Answer to Question 3

C



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