Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's productivity.
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Suppose the most you would be willing to pay for a plane ticket home is $250, but you buy one online for $175. The consumer surplus of buying the online ticket is ( ).
A. $175.
B. $250.
C. $75.
D. $0.
Like competitive firms, monopolies choose to produce a quantity in which marginal revenue equals marginal cost.
Copyrights and patents are examples of barriers to entry that afford firms monopoly pricing powers.
A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.