A profit-maximizing monopolist operates where demand is: a. ...

[chandani]

A profit-maximizing monopolist operates where demand is:
 a. inelastic.
 b. unit elastic.
 c. elastic.
 d. infinitely elastic.

Question 2

Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of 10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about 4 million. Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run. Which of the following could have led to this outcome?
 a. Flettner experienced high production costs due to inadequate supply of inputs.
  b. New firms entered the helicopter industry.
  c. The German government ran a balance of payment deficit.
  d. The Argentine government retaliated by subsidizing Cicare.
  e. There was very low investment in research and development in this industry.

[mmj22343]

Answer to Question 1

c

Answer to Question 2

d