Comparing a Pure Monopoly and a Purely Competitive Firm with Identical

question 223

Multiple Choice

Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's

• A) price, output, and average total cost would all be higher.
• B) price and average total cost would be higher, but output would be lower.
• C) price, output, and average total cost would all be lower.
• D) price and output would be lower, but average total cost would be higher.

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Definitions:

External Attributions

The process of attributing the cause of one's own or others' behaviors to external factors or the situation.

Fundamental Attribution Error

The tendency to underestimate situational influences and overestimate personal traits when explaining others' behaviors.

Actor/observer Bias

A cognitive bias that explains differences in how people attribute causes to their own versus others' behavior; typically attributing one's own actions to situational factors and others' actions to personal characteristics.

Internal Attributions

Explanations for people's behaviors based on their internal characteristics, such as personality traits, motives, or attitudes, as opposed to the influence of external circumstances.