Suppose That a Monopolist Calculates That at Its Present Output

question 55

Multiple Choice

Suppose that a monopolist calculates that at its present output level, marginal revenue is $4.50 and marginal cost is $2.75. It could maximize profits or minimize losses by

• A)increasing price and decreasing output.
• B)decreasing price and increasing output.
• C)decreasing price and leaving output unchanged.
• D)decreasing output and leaving price unchanged.

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Definitions:

Partnerships

A business structure where two or more individuals manage and operate a business in accordance with terms set out in a Partnership Agreement.

Sole Proprietorship

A business owned and operated by one person.

Corporation

A business structure that creates an entity separate from its owners and managers.

Public Company

A corporation whose shares are traded openly on stock exchanges, subject to regulatory oversight and required to disclose financial and other significant information.