{"id":48689,"date":"2024-04-15T22:44:55","date_gmt":"2024-04-15T22:44:55","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=48689"},"modified":"2024-04-15T22:44:55","modified_gmt":"2024-04-15T22:44:55","slug":"consider-the-following-statements-1-one-way-for-the-government-to-induce-a-monopolist-to-expand-his-output-is-by-imposing-a-price-ceiling-that-makes-the-monopolist-lower-his-price-2-mc-mr-ac","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-one-way-for-the-government-to-induce-a-monopolist-to-expand-his-output-is-by-imposing-a-price-ceiling-that-makes-the-monopolist-lower-his-price-2-mc-mr-ac\/","title":{"rendered":"Consider the following statements 1. One way for the government to induce a monopolist to expand his output is by imposing a price ceiling that makes the monopolist lower his price. 2. MC = MR = AC = AR shows the equilibrium position of the competitive firm. 3. One way for the government to induce a monopolist is to make the monopolist raise his price. 4. One way for the government to induce a monopolist is to expand his output by imposing a specific tax on the monopolist output."},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9780f0da57f\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"true\">\r\n                    1 and 2                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    3 and 4                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    Only 2                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    1, 2 and 3                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: Only 2.<\/p>\n<p>Statement 1 is incorrect because a price ceiling will not induce a monopolist to expand his output. A price ceiling is a legal maximum price that can be charged for <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> a good or service. If the government imposes a price ceiling below the monopolist&#8217;s equilibrium price, the monopolist will be unable to sell any output.<\/p>\n<p>Statement 2 is correct. A competitive firm will produce at the point where MC = MR = AC = AR. This is because the competitive firm is a price taker, meaning that it cannot affect the market price. The competitive firm will therefore produce at the point where marginal revenue equals marginal cost, which is also the point where average cost equals average revenue.<\/p>\n<p>Statement 3 is incorrect. The government cannot induce a monopolist to raise his price. A monopolist is a price maker, meaning that it can affect the market price. The monopolist will therefore choose the price that maximizes its profits, which is not necessarily the highest price that it could charge.<\/p>\n<p>Statement 4 is incorrect. The government <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> cannot induce a monopolist to expand his output by imposing a specific tax on the monopolist&#8217;s output. A specific tax is a tax that is levied on a per-unit basis. If the government imposes a specific tax on the monopolist&#8217;s output, the monopolist will shift the burden of the tax onto consumers by raising the price of its output. The monopolist will therefore produce less output, not more.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Consider the following statements 1. One way for the government to induce a monopolist to expand his output is by imposing a price ceiling that makes the monopolist lower his price. 2. MC = MR = AC = AR shows the equilibrium position of the competitive firm. 3. 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