If the variable costs of a profit-maximizing pure monopolist decline, the firm should:
A. produce more output and charge a higher price.
B. produce more output and charge a lower price.
C. reduce both output and price.
D. raise both output and price.
Answer: B
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Under the gold standard, to increase the money supply in the country, the government must
A) increase the value of the country's currency on foreign exchange markets. B) simply print more currency. C) have enough gold to back up the increase in the money supply. D) buy foreign currencies with dollars to increase foreign currency reserves.
If demand is inelastic, the absolute value of the price elasticity of demand is
A) less than one. B) greater than one. C) one. D) greater than the absolute value of the slope of the demand curve.
When aggregate demand increases,
A) the price level is likely to rise as GDP rises. B) the price level is likely to fall as GDP rises. C) aggregate supply will shift to the right. D) aggregate supply will shift to the left.
Suppose the economy's production function is Y = AK0.3N0.7. If K = 2000, N = 100, and A = 1, then Y = 246. If K rises by 10%, and A and N are unchanged, by how much does Y increase?
A) 30% B) 10% C) 6% D) 3%