If marginal cost exceeds marginal revenue, a profit-maximizing monopolist will:
A. restrict output to increase the price even higher.
B. raise price and expand output to increase profit.
C. lower price and expand output to increase profit.
D. attempt to maintain this position because it is consistent with profit maximization.
Answer: A
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According to your text, when a shortage exists,
A) buyers compete with buyers. B) buyers compete with sellers. C) sellers compete with sellers. D) the price of the good would tend to fall in order to eliminate the shortage.
Which of the following is NOT one of the eight basic puzzles about financial structure?
A) Debt contracts are typically extremely complicated legal documents that place substantial restrictions on the behavior of the borrower. B) Indirect finance, which involves the activities of financial intermediaries, is many times more important than direct finance, in which businesses raise funds directly from lenders in financial markets. C) Collateral is a prevalent feature of debt contracts for both households and business. D) There is very little regulation of the financial system.
The ________ of the 1968 tax surcharge led to the prominence of the developer of the permanent-income hypothesis that predicted it, ________
A) success, Walter Heller B) success, Milton Friedman C) failure, Walter Heller D) failure, Milton Friedman
If potential GDP for the fourth quarter of 2012 = $58.5 billion, and real GDP for the fourth quarter of 2012 = $53.7 billion, then the output gap was
A) -8.9%. B) -8.2%. C) 8.2%. D) 8.9%.