Ameritech has a monopoly over local telephone service. If Ameritech is producing where marginal revenue is less than marginal cost, the firm
A. could increase profits by increasing output.
B. is maximizing profits.
C. could increase profits by reducing output.
D. must be earning a zero profit.
Answer: C
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A) 0.1 to 0.2 B) 0.2 to 2.0 C) 0.4 D) 0.5 to 1.0 E) 1.0 to 3.0
Which of the following will not cause a change in demand for crackers?
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If someone earned $25 million a year acting on a sitcom, the chances are that _____ of that $25 million would be economic rent.
A. none B. a small part C. a large part D. all
If your cumulative Grade Point Average (GPA) after two years of college is 3.0, and your grades for the current semester average 3.5, what will happen to your cumulative GPA? Explain the similarity of this example to the case of marginal cost and average cost