If a monopolist is producing the quantity at which price equals marginal cost, it should
A) continue to produce this amount if it wants to maximize profits.
B) reduce output if it wants to maximize profits.
C) reduce price and keep output unchanged if it wants to maximize profits.
D) increase output if it wants to maximize profits.
Answer: B
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Which of the following is associated with classical growth theory?
I. Growth in real GDP can continue indefinitely. II. Technological growth increases as the population grows. III. Population explosions bring real GDP per person back to subsistence levels. A) I B) II C) III D) I and III
Free trade leads to an overall improvement in the standard of living in a country because everything is produced at the lowest possible cost
a. True b. False Indicate whether the statement is true or false
The price elasticity of demand will be larger in absolute value if
a. expenditure on the good represents a smaller proportion of the consumer's total expenditure b. we define the good more broadly c. we define the good more narrowly d. the number of substitutes is smaller e. the number of consumers is larger
What will happen when a monopolistic competitive firm increases its price?
a. It will lose all its customers like a perfect competition firm. b. It will lose only a few of its customers like a monopolist. c. It will lose fewer customers than under perfect completion but more than a monopolist. d. It will not lose any customers.