Which of the following is not true about a profit-maximizing monopolist?
a. The monopolist faces the downward-sloping market demand curve.
b. The monopolist always earns an economic profit.
c. The price of output exceeds marginal revenue.
d. The monopolist chooses output where marginal revenue equals marginal cost.
e. All of these are true.
Ans: b. The monopolist always earns an economic profit.
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Refer to Figure 23-4. Potential GDP equals $500 billion. The economy is currently producing GDP1 which is equal to $450 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?
A) -$40 billion B) -$10 billion C) $10 billion D) $40 billion
If the absolute price elasticity of demand of a good is 1.46, then the total revenues will increase if its market price
A) increases. B) decreases. C) stays the same. D) changes, but we can't tell without more information if the price increases or decreases.