Which of the Following Statements Is True

question 75

Multiple Choice

Which of the following statements is true?

• A) The more elastic the demand, the higher the profit-maximizing markup.
• B) The more elastic the demand, the lower the profit-maximizing markup.
• C) The higher the marginal cost, the lower the profit-maximizing price.
• D) The higher the average cost, the lower the profit-maximizing price.

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Definitions:

Monopolistic Competitors

Firms in a market structure where there are many producers selling products that are similar but not identical, allowing for a degree of market power and some control over prices.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that the buyer is willing to pay, capturing all available consumer surplus.

Large Firms

Companies that are significantly larger than the average for their industry, often having considerable influence over market conditions and prices.

Demand Curve

A graphical representation that shows the inverse relationship between the price of a good or service and the quantity demanded by consumers.