Suppose a firm has market power and faces a downward sloping demand curve for its product, and its marginal cost curve is upward sloping. If the firm reduces its price, then:
A) consumer and producer surplus must increase.
B) consumer surplus increases, producer surplus may increase or decrease.
C) consumer surplus increases, producer surplus must decline.
D) consumer and producer surplus must decline.
B
You might also like to view...
According to the text, all of the following are EU member states EXCEPT:
a. Poland b. Ukraine c. France d. Germany e. Greece
A. Everything else remaining unchanged, what is likely to happen to the demand curve for coffee workers if:
i. there is a fall in the price of coffee. ii. there is an increase in the wage rate. iii. there is a rise in the price of coffee seeds. iv. a new fertilizer that increases the productivity of coffee farmers is invented. b. Everything else remaining unchanged, what is likely to happen to the supply curve of female workers if: i. the opportunity cost of working outside home decreases. ii. there is an increase in the wage rates.
Which of the following is TRUE?
a. Maximizing division profits can sometimes lead to reducing company-wide profits b. Managers of profit centers are not given any discretion in their decision making c. Profit centers usually require the highest degree of attention of corporate executives d. A manager being rewarded on division revenues has no incentive to make good decisions for his division
When economies of scale exist,
a. production costs per unit increase as output expands. b. production costs per unit decline as output expands. c. total production costs decrease. d. total production costs increase.