A Monopoly Firm Is Producing at the Output Where Marginal

question 98

Multiple Choice

A monopoly firm is producing at the output where marginal cost equals $6, marginal revenue equals $9, and average variable cost equals $5. To maximize profits, the firm should:

• A)increase both output and price.
• B)increase output but decrease the price.
• C)decrease output and increase the price.
• D)decrease both output and price.
• E)decrease output, keeping price constant.

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Definitions:

Factor A

A term used in experimental design and analysis to denote one of potentially several independent variables being studied for its impact on a dependent variable.

Null Hypothesis

A statement in statistical analysis that proposes there is no significant difference or effect, intended to be tested against an alternative hypothesis.

Research Hypothesis

A statement suggesting a potential outcome or association that a study is designed to investigate, often proposing how two variables are related.