Question

In: Economics

4. Indicate whether each of the following statements is true or false, and explain why. a....

4. Indicate whether each of the following statements is true or false, and explain why.
a. A competitive firm that is incurring a loss should immediately cease operations.
b. A pure monopoly does not have to worry about suffering losses because it has the power to set its prices at any level it desires.
c. In the long run, firms operating in perfect competition and monopolistic competition will tend to earn normal profits.
d. Assuming a linear demand curve, a firm that wants to maximize its revenue will charge a lower price than a firm that wants to maximize its profits.
e. In an oligopoly, the firm that has the largest market share will also be the price leader.
f. The demand curve facing a firm in a monopolistically competitive market is more elastic than one facing a pure monopoly.

Solutions

Expert Solution

1) :- it is false,because their is no such kind of Rule to stop prouction when loss is incurring . perfection competition market will produce it product even in Short run if it's price is lower than long run . Their is Only conditions in which firm can stop producing good and that is when revenue or price is below than average variable cost.

2) :- it is false, monopolies only can control some degree of price of product which they produce to sell but in every market law of demand is always work so in monopolist firm demand curve is market demand curve which is downward sloping and whenever monopoly try to increase price of good it show inverse relationship between price and demand in the market.

3) :--it is totally true, in the long period firm operating in perfect competition and monopolistic competition earn normal profit and the reason behind it is no berrier on entry and exist which attract people new firm when existing firm earm higher profit in such market and if losses are occure in this market some firm will left the market and this way in Long all firm in this market earn zero profit or normal profit.

4) :--it is also true that those firm who want to increase it revenue must low its product price and it will happen when marginal revenue will equal to zero .

Rahul Sunny answered 2 days ago
Next > < Previous

Related Solutions

Indicate whether each of the following statements is true or false, and explain why. A competitive...
Indicate whether each of the following statements is true or false, and explain why. A competitive firm that is incurring a loss should immediately cease operations. A pure monopoly does not have to worry about suffering losses because it has the power to set its prices at any level it desires. In the long run, firms operating in perfect competition and monopolistic competition will tend to earn normal profits. Assuming a linear demand curve, a firm that wants to maximize...
Indicate whether each of the following statements is true or false. If false, indicate how to...
Indicate whether each of the following statements is true or false. If false, indicate how to correct the statement. a. The amount reported for accumulated other comprehensive income (AOCI) on the balance sheet must be a positive amount consistent with all other stockholders’ equity accounts. b. Changes in AOCI are reflected in other comprehensive income, which is different from net income. c. Other comprehensive income does not imply a change in cash.
Indicate whether each of the following statements is true or false and why (reasons in support...
Indicate whether each of the following statements is true or false and why (reasons in support of your answer): a)Economies of scale arise because of the inverse relationship between the quantity produced and per unit fixed costs. b)In theory, monopolists and oligopolists operating in contestable markets may benefit consumers more than firms operating under conditions of perfect competition. c)Suppose that a profit maximizing monopolist has a constant marginal cost equal to 6 and faces the following inverse demand: P=30-3Q. The...
Indicate whether each of the following statements is true or false and why (reasons in support...
Indicate whether each of the following statements is true or false and why (reasons in support of your answer): (a) Economies of scale arise because of the inverse relationship between the quantity produced and per unit fixed costs. (b) In theory, monopolists and oligopolists operating in contestable markets may benefit consumers more than firms operating under conditions of perfect competition. (c) Suppose that a profit maximizing monopolist has a constant marginal cost equal to 6 and faces the following inverse...
Indicate whether the following statements are true, false, oruncertain. Explain why. (a) As income is...
Indicate whether the following statements are true, false, or uncertain. Explain why. (a) As income is eventually spent on consumption, income and consumption taxes are equivalent. (b) If we use wage rate as basis of taxation, it satisÖes horizontal equity. (c) By increasing corporation income tax rate, we can reduce income inequality. (d) We can eradicate the underground economy by imposing heavy tax. (e) Progressive income tax scheme is necessarily involved with increasing marginal tax rate. (f) If we collect...
Indicate whether the following statements are true, false, or uncertain. Explain why. (a) As income is...
Indicate whether the following statements are true, false, or uncertain. Explain why. (a) As income is eventually spent on consumption, income and consumption taxes are equiv- alent. (b) If we use wage rate as basis of taxation, it satisÖes horizontal equity. (c) By increasing corporation income tax rate, we can reduce income inequality. (d) We can eradicate the underground economy by imposing heavy tax. (e) Progressive income tax scheme is necessarily involved with increasing marginal tax rate. (f) If we...
Indicate whether each of the following statements is true or false. If it is false, you...
Indicate whether each of the following statements is true or false. If it is false, you must explain why it is false (you can use equations as part of an explanation when needed). Not explaining is the same thing as not answering. If it is true, no explanation is needed: a.   The Romer model is useful because it allows us to explain why poorer countries grow faster than richer countries. b.   The main difference between the Solow model and the...
Indicate whether the following statements are true or false. Why or why not? Explain your answer...
Indicate whether the following statements are true or false. Why or why not? Explain your answer clearly and concisely. a. [5 points] The fact that health and income are positively correlated suggests that a policy of transferring income from the wealthy to the poor will increase overall health in society. b. [5 points] The concept of need in health care derives from the presence of externalities in healthcare markets.
Indicate if the following statements are true or false. For false statements, explain why the statement...
Indicate if the following statements are true or false. For false statements, explain why the statement is false or give the correct answer.(1 point each) 6. A simple attribute can be broken down into smaller components. 7. The relationship between a weak and strong entity is called a multiple relationship. 8. An identifier is a combination of two or more attributes from two tables. 9. A unary relationship must have mandatory many cardinality on both sides. 10. If two entities...
Indicate whether the following statements are true or false. Explain why (a) The partial molar temperature,...
Indicate whether the following statements are true or false. Explain why (a) The partial molar temperature, the partial molar volume, and the partial molar heat capacity are all proper partial molar quantities because the temperature, volume, and heat capacity are all extensive quantities. (b) (4 points) ∆G and ∆ST ot can be seen to provide equivalent information about the sponteneity of a process. This is because ∆Ssys can be related to −∆H/T and ∆Ssurr can be related to −T∆S. (c)...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT