Author Question: Which of the following statements accurately describes a difference between a firm that is a ... (Read 296 times)

nautica902 · **on:** Jun 30, 2018

Which of the following statements accurately describes a difference between a firm that is a monopolist and one that is a competitive price taker?
a. Marginal revenue and market price are equal for the competitive price taker but not for the monopolist.
b. The monopolist does not always produce the output that equates marginal cost and marginal revenue; the competitive price taker does.
c. The monopolist charges the highest price possible; the competitive price taker charges a price equal to its per-unit cost.
d. A monopolist can earn economic profit in the short run; a competitive price taker cannot.

Question 2

JoAnn considers cola and plain sparkling water to be good substitutes. Suppose the price of sugar, a key ingredient used to produce cola, falls. According to the income effect, which of the following is most likely to occur?
a. JoAnn will purchase less cola and more sparkling water.
b. JoAnn will purchase more cola and less sparkling water.
c. JoAnn will purchase more of most goods due to her higher real income.
d. JoAnn's demand curve will decrease (shift in), causing her to purchase less cola.