Suppose a Monopolist Has Zero Marginal Cost

question 2

True/False

Suppose a monopolist has zero marginal cost.If he faces a market demand curve with constant price elasticity of -2, the profit maximizing output level approaches infinity.

---

Definitions:

Equilibrium

A state in a market where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price.

MPs

Members of Parliament, elected officials who represent constituencies and have legislative responsibilities in the national government.

Purely Competitive Conditions

A market structure characterized by many buyers and sellers, where each seller offers an identical product, leading to price taken as given by individual sellers due to the market's competition.

Marginal Product Data

Information that shows the additional output generated by adding one more unit of a factor of production, holding all else constant.