Author Question: Assume a monopolist charges a price corresponding to the intersection of the marginal cost and ... (Read 16 times)

kshipps · **on:** Jun 30, 2018

Assume 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. continue to operate in the short run.
c. shut down.
d. all of these are true.

Question 2

Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50 per loaf, and wine costs 6 per bottle. In this situation, the consumer:
a. could increase utility by buying more bread and less wine.
b. could increase utility by purchasing more wine and less bread.
c. has maximized utility and attained consumer equilibrium.
d. is violating the law of diminishing marginal utility.