The Conclusion That a Monopoly Results in Lower Output and Higher

question 345

Multiple Choice

The conclusion that a monopoly results in lower output and higher prices than perfect competition relies on the assumption that

• A) the demand curve for a monopoly is horizontal.
• B) consumers are ignorant of the effects of monopoly.
• C) the costs of production are the same whether the industry is perfectly competitive or a monopoly.
• D) elasticity of demand varies along the market demand curve.

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Definitions:

Validity Effect

The tendency of people to believe that a statement is true or valid simply because it has been repeated many times.

Fundamental Attribution Error

The tendency to overemphasize personality traits and underestimate situational factors when explaining other people's behavior.

Cognitive

Relating to mental activities involved in the acquisition, processing, storage, and retrieval of information.

Feeling

A complex psychological state that involves physiological and cognitive components in response to stimuli or internal thoughts.