Under which of the following situations would a monopolist increase profits by lowering price (and increasing output):
A. if it discovered that it was producing where MC = MR.
B. if it discovered that it was producing where its MC curve intersects its demand curve.
C. if it discovered that it was producing where MC < MR.
D. under none of these circumstances because a monopolist would never lower price.
Answer: C
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The price of soft drinks increases. Which of the following is not part of the likely chain of events that follows from this price change?
A. The demand for fruit juices increases. B. The manufacturers of soda?canning machines lay off some workers. C. Producers of soft drinks increase their production of soft drinks. D. Some consumers of soft drinks reduce their consumption of soft drinks.
What options have been suggested for shoring up the finances of Social Security and Medicare? Why are they unpleasant ones to consider?
What will be an ideal response?
In the long run, firms in a competitive market
A) shut down because profit goes to zero. B) lose money. C) are not profit maximizing. D) earn zero economic profit.
Nancy is considering forming a 5 year business partnership with Claudia. Nancy believes her portion of the partnership will generate the following profits:
Year Profits Present Value 1 $2,000 2 $4,000 3 $12,000 4 $15,000 5 $18,000 Nancy's appropriate discount rate is 6%. To join the partnership, Nancy needs to invest $30,000. Does the partnership offer a rate of return in excess of 6%?