A profit-maximizing monopolist
a. never produces on the inelastic portion of the demand curve because it can increase profit by increasing output
b. never produces on the inelastic portion of the demand curve because marginal revenue exceeds marginal cost
c. always produces on the inelastic portion of the demand curve
d. never produces on the elastic portion of the demand curve because there are no substitutes for the good it produces
e. never produces on the inelastic portion of the demand curve because marginal revenue is negative there
E
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Which of the following scenarios is consistent with typical estimates of the sacrifice ratio?
a. Inflation is reduced from 4 percent to 1 percent, and annual output falls by 10 percent. b. Inflation is reduced from 6 percent to 4 percent, and annual output falls by 10 percent. c. Inflation is reduced from 8 percent to 5 percent, and annual output falls by 9 percent. d. Inflation is reduced from 3 percent to 2 percent, and annual output falls by 3 percent.
John Maynard Keynes stated that “In the long run we are all dead!” Explain what he meant by this.
What will be an ideal response?