Author Question: The Stay-Dry Company monopolizes the sale of umbrella hats. The company is currently setting ... (Read 40 times)

sam.t96 · **on:** Apr 19, 2019

Question 1

If there is no output for which
TR >
TC, a monopolist

◦ will still earn a positive economic profit.
◦ will not earn a positive economic profit.
◦ will break even.
◦ must shut down.

Question 2

The Stay-Dry Company monopolizes the sale of umbrella hats. The company is currently setting marginal revenue equal to marginal cost and selling 2,500 umbrella hats at a price of $40 each. Total costs for the company are $180,000 of which fixed costs are $90,000. You are hired as an economic consultant to this company. You should advise this monopolist to

◦ shut down in the short run and exit the industry in the long run.
◦ produce in the short run and expand capacity in the long run.
◦ produce in the short run but exit the industry in the long run if conditions do not change.
◦ shut down in the short run but expand capacity in the long run if conditions do not change.

kingdude89 · **Reply #1 on:** Apr 19, 2019

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