Suppose That the Only Maker of a Particular Type of Horse

question 44

Multiple Choice

Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low.The correct analysis of this situation is that

• A)the producer's decision is irrational, since monopolies are not limited by the demand curve
• B)the producer's decision is irrational, since monopolies never go out of business
• C)the producer's decision is irrational, since it could simply raise the price
• D)the price received by the producer was lower than the marginal cost in the long run
• E)the price received by the producer was lower than the average total cost in the long run

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Definitions:

Innovative Firms

Companies that introduce new ideas, products, or methods, significantly impacting their industry and potentially driving economic growth through innovation.

New Product

An item recently introduced to the market that fulfills a need or niche not met by existing products.

Research and Development

The iterative process of systematic work undertaken to increase the stock of knowledge and use this knowledge to devise new applications.

Patent Protection

Legal rights granted to inventors that prevent others from making, using, or selling their invention for a certain period of time.