A monopoly firm expands its output and lowers its price. The firm finds that its total revenue falls. Hence, the firm is producing in the
A) elastic range of its demand curve.
B) inelastic range of its demand curve.
C) elastic range of its supply curve.
D) inelastic range of its supply curve.
B
You might also like to view...
If the aggregate income of an island country is $8 million and income per capita is $5,000, the total population of the island is ________
A) 1,600 B) 106,000 C) 40,000 D) 20,000
The impact of monetary policy on the exchange rate is emphasized by
A) supply-side economists. B) Monetarists. C) Keynesians. D) rational expectations theorists.
A perfect price discriminating equilibrium maximizes
A) consumer surplus. B) the associated deadweight loss. C) the market inefficiency. D) total welfare.
The owner of Tie-Dyed T-shirts, a perfectly competitive firm, has hired you to give him some economic advice. He has told you that the market price for his shirts is $20 and that he is currently producing 200 shirts at an AVC of $15 and an ATC of $25. What would you recommend to him?
A. To shut down in the short run, as he is incurring a loss, and to leave the industry in the long run, if there are no changes in economic conditions. B. To continue producing in the short run, as his loss from production is less than his fixed costs, but to exit the industry in the long run if there are no changes in economic conditions. C. To continue to produce in the short run, even though he is earning a loss, and to expand in the future with the hope of increasing market share and total revenue. D. You tell him you cannot make any recommendations until you know what his fixed costs are.