Will a profit-maximizing monopolist who is not subject to government regulation produce a quantity where the MR < 0?
What will be an ideal response?
Never. If the MR < 0, the firm would always be better off decreasing its production to raise prices. Doing so increases revenues and decreases costs, resulting in a higher level of profit.
You might also like to view...
Briefly explain how the miserliness of Ebenezer Scrooge might actually be beneficial for economic growth
What will be an ideal response?
Which of the following is a key assumption leading to the Monetarist view that government deficits crowd out private investment?
A) Money demand is sensitive to the interest rate. B) The aggregate supply curve is horizontal. C) Technology is fixed. D) Investment is sensitive to the interest rate.
The above figure shows the payoffs to two firms deciding to open a gasoline station in an isolated town. If firm A decides first, what will happen? If there is a $60 fee to enter this market, what will happen?
What will be an ideal response?
Using the general concept of elasticity, would you expect the elasticity of demand for advertising to be positive or negative? Explain