Suppose that a monopolist calculates that at present its output level, marginal revenue is $1.00 and marginal cost is $2.00. He or she could maximize profits or minimize losses by:
A. Decreasing price and increasing output
B. Increasing price and decreasing output
C. Decreasing price and leaving output unchanged
D. Decreasing output and leaving price unchanged
B. Increasing price and decreasing output
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Mechanisms that manufacturers can use to deal with misaligned retailer incentives include
a. setting a maximum retail price b. allowing many retailers to sell the product in each market c. compensating retailers' sales staff for demonstrating the product d. eliminate manufacturer staff that was demonstrating the product in stores
If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should:
a. decrease his spending on cola. b. decrease his spending on cola and increase his spending on shirts. c. increase his spending on shirts. d. increase his spending on cola and decrease his spending on shirts.