MCQ 6 Consider a profit-maximising monopoly firm which operates under conditions of rising marginal cost and faces a downward-sloping demand curve. The firm is currently operating at the rate of production where MR is £120 and MC is £90. At this rate of production, ATC is £100. From this information we can infer that: А the market price must be £90 and the firm is incurring losses at the current rate of production B the firm is failing to maximise profits and should reduce price and increase the rate of production C the market price must be £100 and the firm is just able to break even at the current rate of production, earning normal profits D the firm is failing to maximise profits and should raise price above £120 and reduce the rate of production E I do not want to answer this question. F the market price firm is £120 and the firm is maximising profits at the current rate of production

MCQ 6 Consider a profit-maximising monopoly firm which operates under conditions of rising marginal cost and faces a downward-sloping demand curve. The firm is currently operating at the rate of production where MR is £120 and MC is £90. At this rate of production, ATC is £100. From this information we can infer that: А the market price must be £90 and the firm is incurring losses at the current rate of production B the firm is failing to maximise profits and should reduce price and increase the rate of production C the market price must be £100 and the firm is just able to break even at the current rate of production, earning normal profits D the firm is failing to maximise profits and should raise price above £120 and reduce the rate of production E I do not want to answer this question. F the market price firm is £120 and the firm is maximising profits at the current rate of production

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.10P: Inverse elasticity rule Use the first-order condition (Equation 15.2 ) for a Cournot firm to show...

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