The Ability of a Monopoly to Charge a Price That

question 72

Multiple Choice

The ability of a monopoly to charge a price that exceeds marginal cost depends on the

• A)price elasticity of supply.
• B)price elasticity of demand.
• C)slope of the demand curve.
• D)shape of the marginal cost curve.

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Definitions:

Reserve Ratio

The fraction of deposits that banks are required to keep on hand as reserves, aimed at ensuring liquidity and controlling the money supply.

Discount Rate

The interest rate charged by central banks on loans they offer to commercial banks or the rate used in discounted cash flow analysis to determine the present value of future cash flows.

Money Supply

The full tally of available monetary resources in an economy at a specified time, comprising cash, coins, and checking and savings account funds.

Reserve Requirement

Central bank regulations that set the minimum amount of reserves that must be held by a commercial bank.