A monopoly incurs a marginal cost of $1 for each unit produced. If the price elasticity of demand equals -2.0, the monopoly maximizes profit by charging a price of
A) $1.00.
B) $1.50.
C) $2.00.
D) $3.00.
C
You might also like to view...
Your school decides to increase the intake of new students next year
To make its decision, what economic concepts would it have considered? Would the school have used the "economic way of thinking" in reaching its decision? Would the school have made its decision on the margin?
When a person drives an automobile, that individual is creating
A) internal costs only. B) private costs only because the individual pays for the insurance, gas etc. C) external costs only. D) social costs.
The unreported underground economy represents about 1 percent of U.S. GDP
Indicate whether the statement is true or false
Granting a pharmaceutical company a patent for a new medicine will lead to (i) a product that is priced higher than it would be without the exclusive rights. (ii) incentives for pharmaceutical companies to invest in research and development. (iii) higher quantities of output than without the patent
a. (i) and (ii) only b. (ii) and (iii) only c. (i) and (iii) only d. (i), (ii), and (iii)