When Goods Produced in Monopolistic Markets Become Inputs to Produce

question 166

Multiple Choice

When goods produced in monopolistic markets become inputs to produce other goods,

• A) prices end up being equal to average costs.
• B) prices rise, but by less than if the input was competitively priced.
• C) prices rise by more than if the input was competitively priced.
• D) everyone is worse off.

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Definitions:

Lock-up

A period post-initial public offering (IPO) during which shareholders are restricted from selling their shares.

Hedge Funds

Investment funds that employ diverse, and often more complex, strategies than traditional mutual funds, including the use of leverage, derivatives, and short selling to generate returns.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.

Maintenance Margin

The minimum equity an investor must maintain in a margin account after the purchase has been made, to keep the position open.