If a monopolist is producing a level of output where MR is less than MC, then it should
A. Increase its output.
B. Lower its price.
C. Lower its output.
D. Shift its marginal cost curve upward.
Answer: C
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A computer sells for $800 in the United States and for 600 British pounds in England. Given an exchange rate of 0.65 British pounds = $1, how do the computer prices of these countries compare?
a. The computer sells for the same price in both countries. b. The computer costs $923 more in the United States. c. The computer costs $95 more in England. d. The computer costs $124 less in the United States. e. The computer costs $124 less in England.
To maximize profit, a firm will produce the level of output where MR = MC. If a firm actually makes a profit depends on the relationship of price to average total cost. What are the three possible relationships between price and average total cost that
determine if a firm will make a profit, experience a loss, or break even? What will be an ideal response?