Answer the following statements true (T) or false (F)
1. A monopolist will avoid setting a price in the elastic segment of the demand curve and prefer to set the price in the inelastic segment.
2. In order to maximize profits, the monopolist will produce the output level where MR = MC and charge a price equal to MR and MC.
3. A monopolist, being the sole seller in a market, is assured of positive economic profits.
4. If a monopolist finds itself operating in the inelastic portion of its demand curve, then it should never lower its price because doing so would reduce its profits.
5. The supply curve for a monopolist is the upward-sloping portion of the marginal cost curve that lies above the average variable cost curve.
1. FALSE
2. FALSE
3. FALSE
4. TRUE
5. FALSE
You might also like to view...
If a price ceiling on coffee is set above the market-clearing price, then
A) the quantity of coffee demanded will decrease. B) the quantity of coffee supplied will increase. C) the quantity demanded for coffee will increase. D) all of the above will occur. E) none of the above will occur.
A price floor influences the outcome of a market if it is ______
A. set below the equilibrium price B. set above the equilibrium price C. an incentive for buyers to increase demand for the good D. an incentive for sellers to decrease supply of the good
Which of the following best describes a situation of economic efficiency?
A) A firm produces to the point at which P = AVC, with MR < MC. B) A firm produces to the point at which P = ATC, with MC < MR. C) A firm produces to the point at which MR = AFC, with P = AVC. D) A firm produces to the point at which MR = MC, with P = MC.
The Southern economy ________________ from the damages of the Civil War.
A. quickly recovered B. experienced no lingering effects C. suffered decades of economic transition