A monopolist will always end up choosing to operate
a. even if its profits are negative.
b. on the elastic portion of its demand curve.
c. until such time as a new competitor enters its market.
d. only if it can capture the entire consumer surplus.
b. on the elastic portion of its demand curve.
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Increases in the price level will
A) raise consumption because some goods and services are more affordable. B) raise consumption because real wealth increases. C) lower consumption because real wealth decreases. D) lower consumption because goods and services are less affordable.
With defined property rights, an externality
A) can only be corrected with government intervention. B) will not lead to a misallocation of resources. C) may be internalized with voluntary contracting, under certain circumstances. D) must lead to society producing inside its production possibilities frontier.
A firm realizes that the market price has fallen below its average total costs, and it is now earning a loss. What is the best action for the firm to take in the short run?
A. Stay open if price is greater than average variable costs. B. Shut down immediately and pay fixed costs only. C. Stay open if total revenue is greater than fixed costs. D. Shut down if price is greater than average variable costs.
A vertical demand curve has an elasticity of demand equal to zero.
Answer the following statement true (T) or false (F)