In the Short Run, How Will a Profit-Maximizing Monopolist React

question 222

Multiple Choice

In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

• A) lower price to expand revenue possibilities.
• B) reduce output and raise price.
• C) maintain the current price if profit is still positive.
• D) increase plant size to lower marginal cost.
• E) decrease plant size to lower marginal cost.

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Definitions:

Specific Performance

A legal remedy in which a court orders a party to perform a specific act, usually in accordance with a contract.

Transfer The Title

The process of legally changing ownership of a property or asset from one party to another.

Title Deed

A legal document or certificate proving ownership of a property or piece of land.

Contract Enforceable

A legally binding agreement that can be upheld in court.