Buying a Monopoly from the Existing Owner Does Not Ensure

question 468

Multiple Choice

Buying a monopoly from the existing owner does not ensure an economic profit because

• A) the market for monopolies is a monopoly.
• B) competition among buyers drives up the cost of buying the firm.
• C) profits equal zero in the long run anyway.
• D) of the deadweight loss triangle.

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Definitions:

Allocative Efficiency

A state of resource allocation where it is not possible to make any one individual better off without making at least one individual worse off.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it represents the variable cost per unit of output.

Marginal Cost

Marginal cost is the cost of producing one additional unit of a good or service.

Consumer Demand

The desire of purchasers, consumers, clients, or users to buy goods and services measured over time.