A firm holds a pure monopoly in the market and can sell 4 units of output at $2.00 per unit and 5 units of output at $1.75 per unit. The firm will produce and sell the fifth unit if its marginal cost is which of the following?

a. $1.75 or less
b. $2.00 or less
c. $0.75 or less
d. $1.00 or less


c. $0.75 or less

The firm will produce and sell the fifth unit if its marginal cost is $0.75 or less.

Economics

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Suppose European incomes increase by 4 percent per year, and as a result, U.S. exports of farm goods to Europe rise by less than 4 percent annually. The elasticity that can be computed from this information is the

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Economics