Use the following graph for a pure monopoly operating in the short run to answer the next question.
At the profit-maximizing level of output, this firm ________.
A. faces a total fixed cost equal to the area of BEFC
B. should shut down
C. generates a loss per unit equal to DE
D. generates an economic profit equal to the area of ABED
Answer: C
Economics
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If demand is unit elastic, a price reduction will
a. increase revenues b. reduce revenues c. reduce quantity demanded d. have no effect on revenues e. increase profits
Economics
Which of the following must be true if the short-run average total cost curve is declining? a. Marginal cost is less than average total cost
b. Marginal cost is less than average variable cost. c. Marginal cost is greater than average total cost. d. Marginal cost equals average total cost.
Economics