Suppose That a Profit-Maximizing Monopoly Firm Undergoes a Substantial Technological

question 31

Multiple Choice

Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40.If in response to its reduction in cost the firm changes its price in a profit-maximizing way,then we can predict that its total economic profit will:

• A)fall.
• B)remain unchanged.
• C)rise.
• D)It is not possible to make a determination from the information given.

Recognize the value of peer review and feedback in refining presentations and written work.

Understand the role of thorough research and source evaluation in supporting arguments and claims.

Utilize creative and analytical thinking in the brainstorming and idea generation phases of writing and presenting.

Understand and articulate the principles of effective writing, including the Seven C's.

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Definitions:

Private Cost

The expenses that a company or an individual incurs as a result of its economic activity, excluding any external costs.

Private Value

The value of a good or service to a particular buyer or group of buyers, which may differ from its market price or the value to other buyers.

Deadweight Losses

Economic inefficiencies that occur when supply and demand are not in equilibrium, usually due to government intervention like taxes or subsidies.

Tax On Gasoline

A government-imposed charge on the sale of gasoline, typically used to fund transportation infrastructure or environmental projects.