Economic regulation of business is justified if, by intervening, government can
a. improve the allocation of resources in society
b. create economic rents for special interest groups
c. reduce output and increase prices for an industry
d. increase tax revenue from the regulated industry
e. force firms to increase their costs of production
QUESTION 2For a perfectly competitive firm, marginal revenue is identical to marginal cost at every quantity.
a. True
b. False
QUESTION 3On a graph, to determine the price a profit-maximizing monopolist would charge, find the quantity at which MC and MR intersect and read up to the demand curve.
a. True
b. False
QUESTION 4Which of the following is not a criticism of monopolies?
a. They restrict output.
b. They set price above the perfectly competitive level.
c. They tend to be less innovative than firms in a competitive market.
d. They exert a disproportionate amount of political influence.
e. They reduce allocative efficiency through perfect price discrimination.
QUESTION 5For a perfectly competitive firm, price is identical to marginal revenue at every quantity.
a. True
b. False
QUESTION 6A monopolist's marginal revenue curve is flatter than its demand curve.
a. True
b. False
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