Question

1. If profit-maximizing monopoly has a positive marginal cost, the firm must set price in the ____part of the demand curve.

A. elastic B. inelastic C. unitary elastic D. depending the situation.

2. Suppose P=100-2Q, MC=0, a profit maximizing monopoly produces___

A. E=-1 B. at elastic part of demand curve C. at inelastic part of demand curve D. cannot be determined since MC=0 E. none of above

3. Suppose a monopoly faces a demand P=24-Q and has a cost function C=10+4Q, which is true?

A. At the monopoly solution P = 14 and MR = 4. B. At the monopoly solution consumer surplus is 50.

C.At the monopoly solution profits equal 90. D. All of above E. None of above

Thank You!

Answer 1