If a Monopolist Is Producing a Rate of Output at Which

question 14

Multiple Choice

If a monopolist is producing a rate of output at which market demand is inelastic,

• A)it may or may not be maximizing its short-run profit
• B)reducing output would reduce both total revenue and total cost
• C)reducing output would increase both total revenue and total cost
• D)reducing output would increase total revenue and reduce total cost
• E)increasing output will increase its short-run economic profit

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Definitions:

Celler-Kefauver Act

A United States antitrust law passed in 1950, aimed at preventing anti-competitive mergers by closing a loophole related to asset acquisition.

Clayton Act

A U.S. antitrust law, enacted in 1914, aimed at promoting fair competition and preventing monopolies by restricting certain types of anti-competitive practices.

Herfindahl-Hirschman Index

A measure used to determine the level of concentration in a market, calculated by summing the squares of the market share percentages of all firms within the industry.

Antitrust Division

A government division responsible for enforcing laws to promote competition and prevent monopolies and other activities that restrain trade.