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True or False. Brief explanation is required.

a. A barrier to entry creates an advantage for incumbents over new arrivals. True or false, explain.

b. Rent control in New York is a prominent example of price floor. True or false, explain.

c. When price is higher than the marginal revenue but lower than the average variable cost, the monopolist makes losses.

d. The demand curve faced by a firm in a monopolistically competitive industry is more elastic than the perfectly competitive firm's demand curve. True or false, explain.

e. An informal agreement to set prices and output is called a cartel. True or false, explain.

f. When price elasticity of demand is -2, the optimal markup on cost is 50. True or false, explain.

g. The consumer surplus represents the excess revenues above the cost of output to producers. True or false, explain.

h. The firm's ability to price discriminate does not depend on how many consumer groups it can identify. True or false, explain.

i. A natural monopoly exists if marginal revenue is falling as output expands. True or false, explain.

j. The total utility of money increases for risk averters, risk seekers, and indifferent to risk. However, their marginal utility of money varies. True or false, explain.

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a. A barrier to entry creates an advantage for incumbents over new arrivals. True or false, explain.

TRUE

A barrier to entry is defined as any factor or industry characteristic that creates an advantage for incumbents over new arrivals.
Barriers to entry prevent new firms from entering the market. Barriers to entry could be patents, legal protections, or financial disincentives such as economies of scale. Legal rights such as patents and licenses can present formidable barriers to new entry in pharmaceutical, cable television, television and radio broadcasting, and other industries. Thus they create advantage for incumbents over new arrivals.

b. Rent control in New York is a prominent example of price floor. True or false, explain.

FALSE
Rent control is an example of Price ceiling.

A price ceiling is a legal maximum on the price of a good or service. An example is rent ...

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