A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing:
A. a loss that could be reduced by producing more output.
B. a loss that could be reduced by producing less output.
C. an economic profit that could be increased by producing more output.
D. an economic profit that could be increased by producing less output.
Answer: C
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An equal increase in government purchases and taxes will cause
A) an increase in real GDP. B) an increase in the budget surplus. C) no change in real GDP. D) a reduction in cyclically adjusted budget surplus.
Describe how a firm that sells only one brand of bleach may be able to increase its profit if it re-labels some of its bleach
What will be an ideal response?
Which of these is a central argument of Keynes's General Theory? a. Competition does not allocate resources efficiently in a modern industrial economy
b. Full employment can be maintained even during a major recession if wage rates are lowered far enough. c. Modern industrial economies do not tend automatically toward full employment rates of output. d. Money does not play an important role in either causing or curing recession. e. Government can best stabilize the economy by letting the market system automatically adjust toward full employment.
Suppose that a labor union negotiates an increase in wages of 4 percent for the coming year because annual inflation for the past five years has been 4 percent. The expectations formed by the union are:
a. pessimistic expectations. b. deductive expectations. c. rational expectations. d. adaptive expectations. e. optimistic expectations.