Economic Questions! True, False, or Uncertain!?

I have four questions that I have to answer either true, false, or uncertain and they are:

1) Monoplies always charge the highest possible price.

2) To find a monopoly, look for bigness. For example, a monopoly is more likely to be found in the oil business than in the dry-cleaning business.

3) If all the companies in an industry raise their prices at the same time, one can be pretty sure that there is collusion or monopoly behavior in this industry.

4) If marginal cost equals marginal revenue, a firm must be breaking even, because costs and revenues are equal.

This is what I answered for each:

1) False

2) False

3) Uncertain

4) False

I would like to make sure these are correct and could you please provide an explanation so I can understand why you answered the question the way you did?

Thank-you

4 Answers

Relevance
  • Favourite answer

    First, the obligatory statement that this is kinda off-topic for philosophy and would probably get more and better results in another, more appropriate section.

    And second, a disclaimer that although economics is a side interest of mine, it's been more than a decade since I've had any formal schooling in it.

    1. False, I think. "Highest possible price" seems like a vague term, because the highest possible price is dependent on the number of sellers in the market. Monopoly pricing is not necessarily the highest possible in any circumstance, though I think it is always higher than market pricing. Monopolies can realize some economies of scale though if they're large.

    2. Uncertain. There is a _correlation_ between "bigness" and being a monopoly, but not necessarily causation. If you run a ma-and-pa drugstore in a small town and you're the only drugstore in town, then technically you are a local monopoly.

    3. False. Simultaneous price increases can also result when the cost of raw materials rises. For instance, if the price of oil spikes from $75 to $100 a barrel, all gas stations will raise their prices, not because they are colluding but because the cost of their raw material has gone up.

    4. Marginal costs & revenues are the costs and revenues on each _additional_ unit produced, not on _all_ units being produced. This is where the age of my memories may be hindering my answer (i.e. I could be wrong), but I think you could still have _total_ costs and revenues being unequal.

    Hope this helps (or at least doesn't hurt)!

  • Anonymous
    4 years ago

    no remember if it particularly is a classification challenge, NO ask your self you're so depressed!! to locate the richness for your self, it is not in a loopy splendor. you're extra helpful and deserve further happiness than it is going to ever present... Peace

  • Naguru
    Lv 7
    1 decade ago

    I also feel so. Philosophy includes everything.

    Source(s): 0wn
  • 1 decade ago

    It's economics not economic.

Still have questions? Get answers by asking now.