As Adam Smith Indicated, the Trouble with Monopoly Is That

question 71

Multiple Choice

As Adam Smith indicated, the trouble with monopoly is that

• A) firms have no incentive to produce efficiently.
• B) regardless of what is produced, the firm will use too many resources.
• C) a producer has no incentive to keep his costs down.
• D) the monopolist "understocks" the market and charges too high a price.

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Definitions:

Statute of Frauds

A rule in law that mandates specific contract types must be written and signed to be legally binding.

Statute of Frauds

A legal principle that requires certain types of contracts to be in writing and signed by the party to be charged, to be enforceable.

Unilateral Contract

An agreement where only one party makes a promise to perform in exchange for an act by the other party, who is not legally obligated to act.

Completely Performed

Refers to a contractual obligation that has been fully executed or carried out by all parties involved to the terms agreed upon.