Question 38 An unregulated monopoly finds that its marginal cost exceeds its marginal revenue. In order to increase its profit, the firm will OA raise its price and move to the segment of the demand line where PED exceeds 1 in absolute value. OB. raise its price, increase its output, and move the segment of the demand line above the point where PED equals 1. OC.lower its price, Increase its output, and shift to the segment of the demand line where PED exceeds 1 in absolute value. O D.continue to produce this level of output because any change will lower its profit.

Question 38 An unregulated monopoly finds that its marginal cost exceeds its marginal revenue. In order to increase its profit, the firm will OA raise its price and move to the segment of the demand line where PED exceeds 1 in absolute value. OB. raise its price, increase its output, and move the segment of the demand line above the point where PED equals 1. OC.lower its price, Increase its output, and shift to the segment of the demand line where PED exceeds 1 in absolute value. O D.continue to produce this level of output because any change will lower its profit.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 33P: Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the...

See similar textbooks

Similar questions

How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?
Suppose the market for Hula Hoops is monopolized by a single firm. a. Draw the initial equilibrium for such a market. b. Now suppose the demand for Hula Hoops shifts outward slightly. Show that, in general (contrary to the competitive case), it will not be possible to predict the effect of this shift in demand on the market price of Hula Hoops. c. Consider three possible ways in which the price elasticity of demand might change as the demand curve shifts: It might increase, it might decrease, or it might stay the same. Consider also that marginal costs for the monopolist might be increasing, decreasing, or constant in the range where MR=MC Consequently, there are nine different combinations of types of demand shifts and marginal cost slope configurations. Analyze each of these to determine for which it is possible to make a definite prediction about the effect of the shift in demand on the price of Hula Hoops.
Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?
How does the demand curve perceived by a monopolist compare with the market demand curve?
Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill Monolpoly
In what sense is a natural monopoly natural?
How is monopoly different from perfect competition?
What is a natural monopoly?
If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?