Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2.
B. P2 and Y3.
C. P3 and Y1.
D. P2 and Y2.
Answer: B
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Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?
A) P = MC B) P = MR C) MR = MC D) MC = ATC E) P > ATC
A monopoly is a firm that produces a good or service for which no close substitute exists
Indicate whether the statement is true or false
If the price elasticity of supply of a good is elastic and the good price increases, then the increase in the good's supply should be
A) greater than the increase in price. B) less than the increase in price. C) the same as the increase in price. D) Cannot be determined from this information
To say that demand is elastic means that
A. people do not like the good very much. B. relatively small changes in quantity demanded lead to relatively small changes in price. C. relatively small changes in price lead to relatively large changes in quantity demanded. D. quantity demanded not very responsive to price changes.