Suppose That Product X Is Sold by a Monopolist Who

question 33

Multiple Choice

Suppose that product X is sold by a monopolist who has constant marginal cost for producing X. Further suppose that there is an exogenous shock to the product X market, resulting in an increase in demand for X and a resulting rightward shift in marginal revenue. Which of the following statements is correct regarding the equilibrium price and quantity of X?

• A)Both price and quantity will rise.
• B)Both price and quantity will fall.
• C)Price will rise; the effect on quantity is uncertain.
• D)Quantity will rise; the effect on price is uncertain.

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