Suppose a monopolist charges a price corresponding to the ...

[leilurhhh]

Suppose a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. If this price is between its average variable cost and average total cost curves, the firm will:
 a. earn an economic profit.
  b. stay in operation in the short-run, but shut down in the long run if demand remains the same.
  c. shut down.
  d. none of these.

Question 2

If a consumer is spending all of his/her income in a manner where MUa / Pa is greater than MUb / Pb, then the consumer:
 a. is maximizing his/her utility.
  b. should increase his/her purchases of B and decrease the purchases of A.
  c. should spend more money on both goods.
  d. should spend less money on both goods.
  e. should increase the purchases of A and decrease the purchases of B.

[xoxo123]

Answer to Question 1

b

Answer to Question 2

e