Monopolists do not prefer to produce in the when the demand for a good produced by them is inelastic. Option B is the correct answer.
- It is common to observe that monopolists, avoid engaging production when the demand for their product becomes inelastic.
- In order to understand this situation, it is important to address the meaning of inelastic demand.
- The term 'inelastic demand' refers to a situation where the demand for a product does not increase/decrease (change) when there is an increase/decrease (change) in its price.
- This does not lead to profits for a monopolist.
- It is because, a firm will be able to secure profits by producing lower amounts of goods for a higher price when the demand is elastic.
- Hence, when the demand is inelastic, the increase in the quantity will be sold at the previous standard price, leading to a fall in terms of the total revenue.
Therefore, it is clear that a monopolist will not produce when the demand for a good is inelastic.
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If there are positive externalities involved with the delivery or consumption of a product, the level of output will be less than the efficient amount of production.
Answer: Option C
<u>Explanation:</u>
Externality means the result or the consequences of the activities which affect some third parties also. But this does not get reflected in the market prices. Positive externality means that the third party gains benefits from the activities related to externalities.
But in this case there is always under production that is the production which is less than efficient amount of production. The reason for this is that the producers of these goods can not capture the extra value of the goods that the third parties get in the form of the prices of that good.
Answer: Neoliberalism
Explanation:
The neoliberalism is the term which is used to refers to the ideology that helps in determining the free marketing capitalism and also deals with the various types of economical ideas.
The main concept of the neoliberalism is that it basically manage the free Enterprise, competition system and also the price mechanisms on the basis of economical policies.
It also helps in emphasizing the un-regulated the finance market and the privatization. Therefore, Neoliberalism is the correct answer.
