A profit-maximizing firm with market power will always produce a level of output where a. demand...
A profit-maximizing firm with market power will always produce a level of output where
a. demand is elastic.
b. demand is inelastic.
c. price is greater than average total cost.
d. marginal revenue is greater than average total cost.
Homework Answers
Answer
Option
a. demand is elastic.
A firm with power has a downward-sloping demand curve and it producer at MR=MC where MC>0 and demand is elastic when MR>0, MR=0 then unit elastic and MR<0 then inelastic.
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