Question 1
Verizon has a monopoly over local telephone service. If Verizon is producing where marginal revenue is greater than marginal cost, the firm
◦ could increase profits by reducing output.
◦ could increase profits by increasing output.
◦ is maximizing profits.
◦ must be earning zero profit.
Question 2
For a profit-maximizing monopolist
◦
P >
MR.
◦
P <
MR.
◦
P =
MR.
◦
P is unrelated to
MR.