A Monopolist Faces a Downward-Sloping Demand Curve and Has Fixed

question 56

Multiple Choice

A monopolist faces a downward-sloping demand curve and has fixed costs so large that when she maximizes profits with a positive amount of output, she earns exactly zero profits.At this positive, profit-maximizing output,

• A)there are decreasing returns to scale.
• B)demand is price inelastic.
• C)marginal revenue is greater than marginal cost.
• D)price equals marginal cost.
• E)average total cost is greater than marginal cost.

---

Definitions:

Ratification

The act of officially approving or confirming an action or decision, usually after the fact, which might not have been initially authoritative or agreed upon.

Apparent Authority

Apparent authority refers to a situation where a third party is led to believe that an agent has the right to act on behalf of a principal, regardless of whether this is true.

Actual Authority

The explicit power given to an agent by a principal, enabling the agent to perform acts on behalf of the principal.

Taxable Income

The portion of an individual's or entity's income used to determine how much tax is owed to the government in a given tax year.