Suppose a Monopoly Is Producing at an Output Such That

question 157

Multiple Choice

Suppose a monopoly is producing at an output such that the price elasticity of demand is 0.8. Then

• A)there is not enough information to reach any conclusion listed.
• B)price equals marginal cost.
• C)output should be increased.
• D)the monopoly is probably maximizing profits.
• E)marginal revenue is less than marginal cost.