Because the Monopolist Charges a Price in Excess of Marginal

question 69

Multiple Choice

Because the monopolist charges a price in excess of marginal costs,it must be the case that the monopolist:

• A)earns an excessive profit.
• B)exploits the consumers who do make a purchase.
• C)fails to equate the benefits to the costs of the last unit produced.
• D)produces less than the socially efficient level of output.

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Definitions:

Consumption

Domestic consumption of goods and services by households.

Autonomous Consumption

The level of consumption that occurs when income is zero, reflecting the basic level of spending necessary to sustain life.

Disposable Income

Available financial resources destined for household spending and saving upon deducting income taxes.

Saving

The process of setting aside a portion of current income for future use, typically to hedge against unexpected expenses, achieve financial goals, or secure a retirement.