The monopolist should NEVER produce in the
A) elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price.
B) inelastic segment of its demand curve because further lowering of the price reduces total revenue.
C) range of output for which the price elasticity of demand is infinity.
D) range of output for which there is a price elasticity exceeding one.
Answer: B
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In the above figure, the combination of computers and televisions shown by point x
A) is not attainable at the point in time for which the graph is drawn. B) can be attained only if some of society's resources are unemployed. C) suggests that the law of increasing relative costs does not hold. D) results only because society allocates its resources inefficiently.
Goods known as substitutes increase the use of another good.
a. true b. false
For a monopolistically competitive firm, barriers to entry are high, which allows the firm to earn positive economic profits in the long run.
Answer the following statement true (T) or false (F)
If there are open first-class seats available on a particular flight, some airlines allow customers with coach (discount) tickets to upgrade to first-class tickets during the electronic check-in process
Suppose the regular price of a first-class ticket is $800, the total price of the upgrade ticket (original price plus the upgrade) is $400, the marginal cost of serving both types of customers (full-fare and upgrade first-class flyers) is $100, and the airline maximizes profits. Which of the following statements is true? A) MR for the full-fare customers must be higher than the MR from upgrade customers. B) MR for the full-fare customers may be higher or lower than the MR from upgrades. C) MR = MC for the full-fare customers, but the airline is willing to collect any positive amount from the upgrade customers. D) MR must be the same for both full-fare and upgrade customers.