A president of the United States promises to produce more defense ...

[JGIBBSON]

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid
 
  A) if the United States is producing at a point on its production possibilities frontier.
  B) if the United States is producing at a point inside its production possibilities frontier.
  C) if the United States is producing at a point beyond its production possibilities frontier.
  D) only if the production possibilities frontier shifts rightward.

Question 2

Why will a profit-maximizing, single-price monopoly NEVER produce the amount of output that maximizes its total revenue?
 
  What will be an ideal response?

[Bsand8]

Answer to Question 1

B

Answer to Question 2

When total revenue is at its maximum, the demand is unit elastic and marginal revenue equals zero. However, to maximize its profit, a single-price monopoly produces so that its marginal revenue equals its marginal cost. If marginal revenue equals zero, then in order for this level of output to maximize the monopoly's profit, marginal cost also must equal zero. But marginal cost will never equal zero because to produce another unit always incurs some costs. Because marginal cost cannot equal zero, it is impossible for a profit-maximizing single-price monopoly to produce the amount of output that maximizes its total revenue.

[JGIBBSON]

Thanks for the timely response, appreciate it

[cpetit11]

TYSM