If a monopolist is producing the output level at which price equals average total cost in the short run, then the firm is earning a normal profit.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2Extensive advertising will always lead to an increase in average total cost for the firm.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3If prices rise within a country, then, other things equal, the value of a unit of domestic currency will:
a. rise in both the domestic and the foreign exchange markets.
b. fall in both the domestic and the foreign exchange markets.
c. rise in the domestic market and fall in the foreign exchange market.
d. fall in the domestic market and rise in the foreign exchange market.
e. fluctuate unpredictably in both domestic and foreign exchange markets.
QUESTION 4Which of the following factors can delay the entry of new competitive firms into the oligopoly market characterized by a dominant firm and some fringe firms?
a. Mergers and acquisitions
b. Price threat
c. Brandname and reputation of the dominant firm
d. Quality controls set by the government
QUESTION 5If a monopolist is producing at that output where price equals average variable cost in the short run, then it is earning a negative profit.
a. True
b. False
Indicate whether the statement is true or false
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