In the Short Run, How Will a Profit-Maximizing Monopolist React

question 84

Multiple Choice

In the short run, how will a profit-maximizing monopolist react if its marginal cost suddenly increases? It will

• A)lower price to expand revenue possibilities
• B)restrict output to extract a higher price from customers
• C)maintain the current price if profit is still positive
• D)increase plant size to lower marginal cost
• E)decrease plant size to lower marginal cost

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Definitions:

Socially Responsible

Pertains to businesses or individuals acting in a way that benefits society and the environment, beyond legal requirements.

Corporate Actions

Activities undertaken by a corporation's management that have substantial impacts on the company's stakeholders, including actions like mergers, acquisitions, share splits, and dividend payments.

Social Responsibility Strategy

A plan of action for a business that aims to contribute positively to society, considering the impact of its operations on environmental and social well-being.

Classical Economic

An economic theory originating in the 18th century that advocates for free markets, competition, and the idea that an invisible hand guides supply and demand.