Question:

In response to increasing demand, a monopolist will?

by  |  earlier

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a) increase price

b) decrease ouput, increase price

c) increase output and maintain price

d) increase price, maintain output

e) maintain price and output

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2 ANSWERS


  1. c) increase output and maintain price

    Higher demand will mean new MR=MC equilibrium, and depending on MC and demand curves slopes price may stay the same (or fall/increase).


  2. Increasing price is definitely one of the reactions from a monopoly, but I don't think the business would maintain or decrease output; so your best bet is a)

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