A Monopolist Faces a Constant Marginal Cost of $1 Per

question 29

Multiple Choice

A monopolist faces a constant marginal cost of $1 per unit and has no fixed costs.If the price elasticity of demand for this product is constant and equal to -3, then

• A)to maximize profits, he should charge a price of $1.50.
• B)to maximize profits, he should charge a price of $3.
• C)to maximize profits, he should charge a price of $1.33.
• D)he is not maximizing profits.
• E)None of the above.

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