A Monopolist Produces at a Point Where the Price Elasticity

question 22

Multiple Choice

A monopolist produces at a point where the price elasticity of demand is -0.7 and the marginal cost is $2.If you were hired to advise this monopolist on how to increase his profits, you would find that the way to increase his profits is to

• A)increase his output.
• B)lower the price.
• C)decrease his output.
• D)produce the output level where marginal cost equals price.
• E)increase his advertising efforts.

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Definitions:

Intercoder Reliability

A measure of the extent to which different observers or analysts consistently apply a coding scheme to assess qualitative data.

Observed Behaviors

Actions or conduct exhibited by individuals or groups that can be directly seen and recorded by others.

Surveys

Research tools composed of a series of questions aimed at gathering information from a sample of individuals.

Split Half

A method for assessing the reliability of a test by dividing it into two parts and comparing scores on each part.