If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50, it will increase its profits by:
A. reducing output and raising price.
B. reducing both output and price.
C. increasing both price and output.
D. raising price while keeping output unchanged.
Answer: A
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When computing percentage changes, using the simple approach results in increases and decreases which are
A) identical. B) symmetric. C) more accurate than using the midpoint method. D) not symmetric.
Discounting is the process of
a. cutting prices to get rid of surplus stocks. b. finding the present value of future dollars. c. finding the future value of present dollars. d. giving special concessions to special customers.
What does the natural-rate hypothesis claim?
An increase in productivity will cause which of the following according to the price-setting behavior of firms?
A) a reduction in prices set by firms B) an increase in the real wage paid by firms C) a reduction in the markup set by firms D) all of the above E) none of the above