Under Which of the Following Situations Would a Monopolist Increase

question 219

Multiple Choice

Under which of the following situations would a monopolist increase profits by lowering price (and increasing output) ?

• A)if it discovered that it was producing where MC = MR
• B)if it discovered that it was producing where its MC curve intersects its demand curve
• C)if it discovered that it was producing where MC < MR
• D)under none of these circumstances because a monopolist would never lower price

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Definitions:

Debt Financing

Raising capital through the sale of bonds, bills, or notes to individuals or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay principal and interest on the debt.

Financial Risk

The possibility of losing money or the uncertainty in achieving the expected returns mainly due to market movements, interest rates, or credit failure.

ROE

Return on Equity is an indicator of a company's financial performance, indicating the amount of profit made from the shareholders' investments.

Financial Leverage

The action of using debt to magnify the expected return on an investment.