If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization
A) is achieved when 21 units are produced.
B) is achieved by setting price equal to 21.
C) is achieved only by shutting down in the short run.
D) cannot be determined solely from the information provided.
A
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Which of the following statements is true?
a. The law of diminishing returns states that beyond some point the marginal product of a variable resource continues to rise. b. The marginal product is the change in total output by adding one additional unit of a fixed input. c. Fixed costs are costs which vary with the output level. d. When marginal productivity of a variable input is falling then marginal costs of production must be rising. e. When marginal cost is below average cost, average cost rises; when marginal cost is above average cost, average cost falls.
When the price of a resource goes up and firms seek other suitable resources, this is called the
a. substitution in production effect. b. substitution in demand effect. c. elasticity effect. d. inelasticity effect.