Under Monopoly, a Firm

question 42

Multiple Choice

Under monopoly, a firm:

• A) is a price taker.
• B) maximizes profit by setting marginal cost equal to marginal revenue.
• C) will shut down in the short-run if price falls short of average total cost.
• D) always earns a pure economic profit.

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Definitions:

Opportunities

Refer to situations where individuals or organizations can exploit conditions to achieve goals or positive outcomes.

Efficient

The most efficient employment of resources to attain the intended result while minimizing waste or exertion.

Better Off

A situation where an individual or group is in a more favorable or advantageous position than before.

Economic Efficiency

A condition in which all available resources are utilized in a way that produces the highest combination of quantity and quality of goods and services.