Which of the Following Statements Is True

question 178

Multiple Choice

Which of the following statements is true?

• A) Under monopoly, the seller sets the price of its good below marginal costs.
• B) Under perfect competition, sellers set the price of their goods below marginal costs.
• C) Under monopoly, prospective buyers may not be able to buy a good even if they have a willingness to pay above marginal costs.
• D) Under perfect competition, prospective buyers may not be able to buy a good even if they have a willingness to pay above marginal costs.

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Definitions:

SEC

The U.S. Securities and Exchange Commission, a federal agency responsible for enforcing federal securities laws and regulating the securities industry.

Tick Size

The minimum price movement of a trading instrument in the market, which can affect the precision of price and order placement.

Bid-Ask Spread

The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for an asset.

Dealers

Individuals or entities that act as principals in buying and selling securities for their own account.