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Assume a Pure Monopolist Is Charging Price P and Selling

Question 225

Multiple Choice

  Assume a pure monopolist is charging price P and selling output Q, as shown on the diagram. On the basis of this information, we can say that A) if marginal costs were somehow zero, the firm would be maximizing its profits. B) if marginal costs were positive, the firm would increase profits by reducing price and selling more output. C) the firm is producing where the price elasticity coefficient is less than one. D) the firm is a  price taker. Assume a pure monopolist is charging price P and selling output Q, as shown on the diagram. On the basis of this information, we can say that


A) if marginal costs were somehow zero, the firm would be maximizing its profits.
B) if marginal costs were positive, the firm would increase profits by reducing price and selling more output.
C) the firm is producing where the price elasticity coefficient is less than one.
D) the firm is a "price taker."

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