A monopolist is producing a level of output at which price is $65, marginal revenue is $35, average total cost is $35, and marginal cost is $50. In order to maximize profit, the firm should
A. produce less.
B. produce more.
C. decrease price.
D. keep output the same.
E. both c and d
Answer: A
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When there few close substitutes available for a good, demand tends to be
A) relatively elastic. B) perfectly elastic. C) relatively inelastic. D) perfectly inelastic.
Protection of an infant industry should be withdrawn once that industry:
a. charges the same price as foreign competitors. b. goes public on the stock exchange. c. raises a large amount of sales revenue. d. achieves sufficient size to compete with foreign firms. e. earns enough profit as a result of the subsidies to remain in business.
If the Fed lends to member banks, what happens to reserves and the money supply?
a. Reserves increase and the money supply decreases. b. Both increase. c. Reserves decrease and the money supply increases. d. Both decrease.
Which of the following is not an important issue in the Keynesian-Monetarist debate?
A. the relative importance of monetary and fiscal policy B. the nature of the transmission mechanism through which a change in the money supply affects the economy C. the shape of the investment-demand curve D. the shape of the money supply curve