A monopolist earning short-run economic profit determines that at its present level of output, marginal revenue is $23 and marginal cost is $30 . Which of the following should the firm do to increase profit?
a. Raise price and lower output.
b. Lower price and lower output.
c. Raise price and raise output.
d. Lower price and raise output.
e. Lower output but leave price unchanged.
A
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The techniques of optimization in levels and optimization in differences:
A) cannot be used to compare the same set of alternatives. B) provide identical answers when comparing the same set of alternatives. C) may provide different answers when comparing the same set of alternatives. D) compare only the costs and ignore the benefits of the alternatives.
The United States has never experienced double-digit inflation
a. True b. False
Firms in perfectly competitive markets who wish to maximize profits should produce:
A. less as long as marginal cost is less than marginal revenue. B. more as long as marginal cost is greater than marginal revenue. C. at the level where marginal cost equals marginal revenue. D. All of these are true.
When a Democrat is elected as president, business leaders expect that the corporate profits tax will be increased. Most likely, this will cause business firms, ceteris paribus, to
A. increase investment because the higher corporate profits tax will increase the return on any investment. B. decrease investment because they would expect lower benefits from investment. C. not change their investment plans because higher corporate profit taxes will not change the demand for their product. D. plan to increase investment in the future to compensate for the higher tax rate.