If a monopolist has no marginal costs and only recurring fixed costs, then, if he produces, any quantity that he produces is profit maximizing if the price elasticity of market demand is -1.
Answer the following statement true (T) or false (F)
True
Rationale: If price elasticity of demand is -1, revenue is the same regardless of how much is produced. In the absence of marginal costs, this implies that profit maximization is the same as revenue maximization, Since any quantity is revenue maximizing, any quantity is profit maximizing -- so long as revenue is greater than the recurring fixed cost.
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As workforces become more educated in countries with comparative advantages in labor-intensive products, cheap labor becomes:
A. less abundant relative to skilled labor. B. more abundant relative to skilled labor. C. more abundant relative to capital. D. None of these is true.
When a supply and demand model is used to analyze the market for labor,
a. demand is generally no longer downward sloping. b. the wage rate is used on the vertical axis as the market price. c. employment is used on the horizontal axis as the market quantity. d. both b and c.
Examples of physical capital include _______________________. Examples of human capital include ______________________________
A) knowledge one picks up through education and training; factories and computers B) machines and factories; chairs and desks C) knowledge one picks up through education and experience; factories and machines D) machines and factories; knowledge one picks up through education and training
Which of the following is an accurate statement about a firm operating at a loss?
a. It will stay open in the short run if its total revenue does not cover variable costs. b. It will stay open in the short run if its total revenue covers variable costs but not all fixed costs. c. It will shut down in the short run if its total revenue exceeds variable costs. d. It will shut down in the short run if its total revenue cannot cover both variable and fixed costs.