Assume quantities need not be integers. A monopolist constrained to charging the same price for each unit faces a linear demand curve and a constant marginal cost equal to $20. Demand is unit elastic at $100. Which of the following is true? A. A per-item price of $100 maximizes producer surplus. B. A per-item price of $100 maximizes total surplus. C. Revenues increase as it increases price from $100. D. Profits increase as it increases price from $100 E. Variable costs increase as it increases price from $100
Assume quantities need not be integers. A monopolist constrained to charging the same price for each unit faces a linear demand curve and a constant marginal cost equal to $20. Demand is unit elastic at $100. Which of the following is true? A. A per-item price of $100 maximizes producer surplus. B. A per-item price of $100 maximizes total surplus. C. Revenues increase as it increases price from $100. D. Profits increase as it increases price from $100 E. Variable costs increase as it increases price from $100
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume quantities need not be integers. A monopolist constrained to charging the same price for each unit faces a linear demand curve and a constant marginal cost equal to $20. Demand is unit elastic at $100. Which of the following is true?
A. A per-item price of $100 maximizes producer surplus .
B. A per-item price of $100 maximizes total surplus.
C. Revenues increase as it increases price from $100.
D. Profits increase as it increases price from $100
E. Variable costs increase as it increases price from $100
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