A monopoly:
a. can increase price and increase output at the same time.
b. can charge any price it wants and still sell all of its output.
c. can sell any output it produces provided it accepts the market price.
d. must lower price in order to increase output.
e. faces a perfectly elastic demand curve.
QUESTION 2Eric is maximizing his total utility through his choices of two goods: clothes and food. His marginal utility of clothes is 60 and his marginal utility of food is 12 . The price of clothes is 20 . What must be the price of food?
a. 12.
b. 6.
c. 4.
d. 1.
e. 0.
QUESTION 3The goal of any monopolist is to maximize:
a. economic profits.
b. normal profits.
c. price.
d. consumer welfare.
e. output.
QUESTION 4If a consumer is choosing the optimal combinations of two goods X and Y, and then the price of good Y decreases, this causes:
a. MU/P of good X to increase, so the consumer now must buy more X to find a new optimal combination.
b. demand for good X to increase.
c. MU/P of good Y to increase, so the consumer now must buy more Y to find a new optimal combination.
d. MU/P of good Y to decrease, so the consumer now must buy more Y to find a new optimal combination.
e. the demand for good X and good Y will not change.
QUESTION 5Using the rule that focuses on the marginal approach to maximizing profits, a monopolist charges a price where the:
a. output sold is maximized.
b. ATC curve is minimized.
c. MR = MC.
d. MR = 0.
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