Whenever a Firm Can Charge a Price Greater Than Marginal

question 67

Multiple Choice

Whenever a firm can charge a price greater than marginal cost,

• A)the firm must be a monopolist.
• B)there is some loss of economic efficiency.
• C)consumers have the ability to choose a close substitute.
• D)the firm will earn economic profits.

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Definitions:

Market Power

The ability of a firm to influence or control the price and quantity of goods or services in a market.

Marginal Revenue

The additional income obtained from selling one more unit of a product or service.

Demand Schedule

A table that shows the quantity of a good or service that consumers wish to buy at each price level.

Output

The quantity of goods or services produced by a firm, industry, or economy in a given period.