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:

Amortization

The process of spreading out a loan into a series of fixed payments over time, accounting for both principal and interest.

Capital Expenditures

Funds spent by a company to acquire or upgrade physical assets such as equipment or property.

Profits After Tax

The net income a company retains after paying all its taxes.

Cost Structure

The composition of fixed and variable costs that a company incurs in the process of delivering goods and services.