Suppose a Monopoly Is Producing at an Output Such That

question 157

Multiple Choice

Suppose a monopoly is producing at an output such that the price elasticity of demand is 0.8. Then

• A)there is not enough information to reach any conclusion listed.
• B)price equals marginal cost.
• C)output should be increased.
• D)the monopoly is probably maximizing profits.
• E)marginal revenue is less than marginal cost.

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Definitions:

Performance Norm

A standard or expectation for behavior and performance that is established by a group.

Cohesiveness

The degree to which members of a group or team feel attracted to the group and motivated to remain a part of it.

Productivity

The efficiency at which individuals or systems produce goods or complete tasks.

Free Riding

A situation in which individual members of a group benefit from the efforts of others without contributing themselves.