Many people believe that a monopolist can set his own price which ...

[justinmsk]

Many people believe that a monopolist can set his own price which consumers have little recourse but to pay, and thereby reap enormous profits. Is this true?

Question 2

Which of the following statements concerning the International Monetary Fund is true?
 a. The IMF was created to help finance economic development in poor countries.
  b. One of the principal aims of the IMF is to discourage international trade and encourage countries to become self-sufficient.
  c. The IMF lends money to countries experiencing large balance-of-payments surpluses.
  d. When the IMF lends currencies, it always insists on the borrowing country taking action to reduce its balance-of-payments surplus.
  e. The IMF obtains funds from annual membership fees charged to member countries.

[duke02]

Answer to Question 1

A monopolist can set his own price for a good or service in the marketplace. However, a firm cannot make consumers purchase any particular quantity of a good. The monopolist is bound by the market demand curve. In order to sell more of output and increase total revenue, he will have to lower his price not only on the marginal units he wishes to sell, but also on all of the units. As a result, there is no guarantee that the best a monopolist could do, at the quantity where MR = MC, allows it to earn any economic profits.

Answer to Question 2

e

[justinmsk]

TYSM

[brbarasa]

Excellent