ECON-102-Fall-2012-Exam-3-Version_A_and_C

38 suppose the price elasticity of demand for coffee

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Unformatted text preview: ease in marginal costs, the monopolist will ________ its price and ________ its level of production. a. raise; decrease b. not change; decrease c. raise; increase d. lower; increase 30. Suppose that a profit- maximizing monopoly firm experiences a substantial technological change that reduces its marginal and average total costs by $40. If in response to its reduction in cost the firm changes its price in a profit- maximizing way, then we can predict that its total economic profit will: a. fall. b. remain unchanged. c. rise. d. It is not possible to make a determination from the information given. 31. Suppose that a monopoly firm is required to pay a new annual license fee just for the privilege of doing business in its city and that the fee is somewhat less than the economic profit the firm is now earning. In response to the increase in fees, the firm will: a. raise its price, but by less than the amount of the license fee. b. raise its price b...
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