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Which fiscal policy would Congress have to adopt to maintain?

Congress would have to adopt a fiscal policy of increasing the taxes in order to maintain its spending levels without raising its debt. Further explanation: Contractionary Fiscal Policy: The government uses the tools of fiscal policy in order to change the level of aggregate demand in an economy.

Which of the following institutions makes up the largest part of the Federal Reserve?

Explanation: While the Board of Governors is a sovereign government agency, the Federal Reserve Banks are set up like private companies. Member banks hold stock in the Federal Reserve Banks and earn profits.

What might monopolists do when confronted?

Monopolists may create an entry barrier when confronted with a new entrant into the industry by: Raising resource prices. Reducing product prices.

What do monopolists do to maximize profits?

In a monopolistic market, a firm maximizes its total profit by equating marginal cost to marginal revenue and solving for the price of one product and the quantity it must produce.

What are the four most important ways a firm becomes a monopoly?

The four main reasons a firm becomes a monopoly are: the government blocks entry, control of a key resource, network externalities, and economies of scale.

Is it true that a monopoly can charge any price and customers will still have to buy the product do you agree or disagree Why?

T or F – A monopoly can charge any price it wants and the consumer must pay that price. This statement is false even though the first part is correct. In fact, any firm can charge any price it wants as a general rule. Monopoly has more market power than Perfect Competition, but does not have absolute market power.

Why would the government want to prevent monopolies?

The government may wish to regulate monopolies to protect the interests of consumers. For example, monopolies have the market power to set prices higher than in competitive markets. The government can regulate monopolies through: Regulation of mergers.

Is there consumer surplus in a monopoly?

– In a monopoly, consumer surplus is always lower (relative to perfect competition). – But it could be that the increase in the firm’s profit more than offsets the decrease in consumer surplus.

Does a monopolist face any limit on the price it charges?

Why are monopolistic competitive firms price searchers? They have SOME control over the price they charge. They can raise the price of their good and still sell some of the good they produce.

Is it easier for a perfectly competitive firm or for a monopolist to determine price?

When a monopolist produces the quantity determined by the intersection of MR and MC, it can charge the price determined by the market demand curve at the quantity. Therefore, monopolists produce less but charge more than a firm in a competitive market.

What best determines the price a price searcher will charge?

What best determines the price a price searcher will charge? equal to price. For a price searcher, marginal revenue is always less than price.

What markets are price searchers?

PRICE- SEARCHER. MARKETS Price searchers face downward-sloping demand curves. The downward slope means that demand is less than perfectly elastic and that the seller faces a tradeoff–more can be sold, but only at a lower price. Examples of price searchers are retailers, auto manufacturers, and accounting firms.

Why are oligopolies price makers?

Oligopolies can result from various forms of collusion that reduce market competition which then leads to higher prices for consumers and lower wages for the employees of oligopolies. Under this situation, oligopolists act like a monopoly and ultimately gain a market power.

Why firm is price taker?

A perfectly competitive firm is known as a price taker because the pressure of competing firms forces them to accept the prevailing equilibrium price in the market. If a firm in a perfectly competitive market raises the price of its product by so much as a penny, it will lose all of its sales to competitors.

Who are price takers?

A producer who has no power to influence prices. It can also reference a company that can alter its rate of production and sales without significantly affecting the market price of its product. A producer who has enough market power to influence prices.

Are Airlines price makers or price takers?

Airlines industry is considered to be the price maker and the airline firms are the price takers. The firms are very large in number and thus, have no proportionate share in the price decision making. It is not practically feasible to consider airlines as a perfectly competitive market.

Can a price taking firm be profit Maximising?

The price-taking firm’s optimal output rule says that a price-taking firm’s profit is maximized by producing the quantity of output at which the marginal cost of the last unit produced is equal to the market price. The marginal revenue curve shows how marginal revenue varies as output varies.

What is the difference between price taker and price maker?

Price Taker vs. A price maker is the opposite of a price taker: Price takers must accept the prevailing market price and sell each unit at the same market price. Price takers are found in perfectly competitive markets. Price makers are able to influence the market price and enjoy pricing power.