If a monopolist produces to a point at which marginal revenue is less than marginal cost then
A) the firm should increase output.
B) the firm should reduce output.
C) the firm is maximizing profits.
D) we do not know if the firm should increase or reduce without more information.
Answer: B
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To combat a recession with discretionary fiscal policy, Congress and the president should
A) decrease taxes to increase consumer disposable income. B) decrease government spending to balance the budget. C) lower interest rates and increase investment by increasing the money supply. D) raise taxes on interest and dividends, but not on personal income.
Which of the following barriers to entry into a market is most beneficial from society's perspective?
A) Economies of scale. B) Ownership of an essential productive resource. C) Brand loyalties. D) Consumer lock-in and switching costs.
In Figure 3-7 above, the multiplier is
A) 2. B) 0.2. C) 5. D) 2.5.
Congress and the President implement an investment tax credit. Which curve in the market for loanable funds shifts, which direction does it shift, and what happens to the interest rate?