How does a monopolist choose the profit maximizing output-price combination?
If marginal cost of production is assumed to be zero, the monopolist produces at the point where marginal revenue becomes zero. In case of positive marginal cost, the monopolist's profit maximizing output is obtained at the point where marginal revenue is equal to marginal cost. In either case, the corresponding price obtained from the demand curve becomes the market price.
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If a company believes the business sector is saturated with competitors, which of the following should it consider?
a. Product differentiation b. A buy-out or acquisition of some of the competition c. Create a price war with the competition d. Relocation of the business
A downward-sloping demand curve is faced by firms:
a. under perfect competition. b. under perfect competition and monopoly. c. in all market structures except monopoly. d. in all market structures except monopolistic competition. e. in all market structures except perfect competition.