Compared to the Productive Efficiency of a Perfectly Competitive Firm

question 116

Multiple Choice

Compared to the productive efficiency of a perfectly competitive firm, a monopolist tends to be

• A)very efficient because it charges a higher price
• B)more efficient because it produces greater output
• C)inefficient
• D)equally efficient, as it also produces where MR = MC
• E)very efficient because it conserves resources by producing less output

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Definitions:

Revealed Preference

A theory that determines consumer preferences based on observing their choices and behavior, assuming consistency in their decision-making.

Prices

The monetary value assigned to goods and services, determining the terms of exchange in a market.

Bundles

Combinations of goods and services offered together as a single package, often at a discounted price.

Weak Axiom

A principle in consumer theory that if a consumer prefers bundle A over bundle B when both are affordable, they will not choose B over A when income or prices change, holding everything else constant.