If the market demand curve has constant price elasticity of -1, the monopolist's price should approach infinity.
Answer the following statement true (T) or false (F)
True
Rationale: Constant price elasticity of -1 implies that price can always be raised without revenue changing. This implies that, whatever price the monopolist charges, he can always to better by increasing his price (so long as MC>0).
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The opportunity cost of producing more of one good on a production possibilities frontier is
A) a dollar amount. B) a ratio of quantities. C) a ratio of prices. D) equal to the area inside the production possibilities frontier. E) a theoretical concept which cannot be measured.
The optimal level of consumption is achieved when ________
A) consumption in one period is equal to consumption in the next period B) utility in one period is equal to utility in the next period C) all income and wealth has been spent D) the slope of the indifference curve is equal to the slope of the budget line
Successful antitrust cases against monopoly have been rare in the last sixty years
Indicate whether the statement is true or false
A firm that is maximizing its profits will keep renting machines up to the point where:
a. the marginal productivity of a capital is maximized. b. the marginal value product of machines is maximized. c. the marginal value product of machines is equal to the market rental rate for machines. d. the machine's market rental rate is minimized.