If the Demand Curve a Monopolist Faces Is Perfectly Elastic,then

question 120

Multiple Choice

If the demand curve a monopolist faces is perfectly elastic,then the ratio of the firm's price to the marginal cost is

• A) 0.
• B) 1.
• C) 2.
• D) None of the above-the answer cannot be determined.

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Definitions:

Shares Outstanding

The total number of a company's shares that are currently owned by all its shareholders, including those held by institutional investors and restricted shares held by company’s insiders.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of one's holdings remains the same.

Shareholder Wealth

The total value of a shareholder's equity in a company, taking into account the current market value of shares owned.

Trading Range

A price range in which stocks are thought to appeal to the widest variety of investors. Typically between $30 and $100. Stock splits function to keep prices within a trading range when the stock is appreciating.