If the Marginal Cost Curve Shifts Upward, a Profit-Maximizing, Nondiscriminating

question 166

Multiple Choice

If the marginal cost curve shifts upward, a profit-maximizing, nondiscriminating monopolist is likely to respond in the short run by

• A)raising price and increasing output
• B)raising price and decreasing output
• C)keeping price constant and increasing output
• D)reducing price and increasing output
• E)shutting down

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Definitions:

Excludable

A characteristic of a good or service that allows its owner to prevent others from using it without permission.

Nonrival

A characteristic of a good whereby one person's consumption does not diminish the availability of the good for consumption by others.

Marginal Social Cost

The additional cost incurred by society as a whole due to the production of one extra unit of a good or service.

Socially Optimal

A state or outcome in which the total benefits to society are maximized, taking into account all costs and benefits, both private and external.