A Profit-Maximizing Monopolist That Produces in the Short Run Will

question 102

Multiple Choice

A profit-maximizing monopolist that produces in the short run will _____

• A)choose the output level where marginal revenue exceeds marginal cost by the largest amount.
• B)increase output as long as the marginal revenue exceeds the marginal cost of producing that unit.
• C)choose the output level where average total cost is at its minimum.
• D)increase price as long as average revenue exceeds average total cost.
• E)choose the output level where average revenue exceeds average total cost by the largest amount.

---

Definitions:

Central Bank

An institution that manages a country's currency, money supply, and interest rates, and oversees the commercial banking system.

Open Market Purchases

Transactions by a central bank in which it buys securities from the market to increase the money supply and encourage economic activity.

Open Market Sales

The selling of government bonds and securities in the open market to control the money supply and influence interest rates.

Relative Price

The price of one good or service compared to the price of another, essentially showing the trade-off between the two items.