For a monopoly firm, the shape and position of the demand curve play a role in determining the i) profit-maximizing price.
Ii) shape and position of the marginal-cost curve.
Iii) shape and position of the marginal-revenue curve.
A) i) and ii) only
B) ii) and iii) only
C) i) and iii) only
D) i), ii), and iii)

Question

Quizplus · Accepted Answer

The shape and position of the demand curve play a role in determining the profit-maximizing price and the shape and position of the marginal-revenue curve. The marginal-cost curve is determined independently of the demand curve and is affected by technology, input prices, and other factors. Therefore, the answer is i) and iii) only, which is option C. Option A is incorrect because the shape and position of the demand curve have no direct impact on the shape and position of the marginal-cost curve. Option B is also incorrect because the shape and position of the marginal-cost curve are not affected by the demand curve. Option D is incorrect because the shape and position of the marginal-cost curve are independent of the demand curve and affect neither the profit-maximizing price nor the marginal-revenue curve.

For a Monopoly Firm, the Shape and Position of the Demand