What should a profit-maximizing monopolist do if she is currently producing where MC < MR?
a. increase output until MC = MR
b. decrease output until MC = MR
c. shut down in the long run
d. keep producing at this level
e. operate only in the short run
A
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Which of the following statements is true?
A) Knowledge of economics complicates decision making. B) Economics is more of a theoretical subject with limited applications in the real world. C) Testing with data is essential to develop a good theory. D) Cost-benefit analysis can be applied only to limited economic decisions.
What is a "marginally attached worker"?
What will be an ideal response?
If a firm responded to a decrease in demand for its product by cutting its price to increase sales, but then all firms experienced a decrease in demand for their products, sticky prices in the aggregate would prevent aggregate demand from rebounding. This is an example of
a. a macroeconomic externality. b. the Expenditure-Output model. c. the expenditure multiplier. d. the coordination argument.
An example of a price ceiling would be:
A. a ration coupon. B. a guarantee of a target price for farm products. C. parity pricing. D. rent control.