1) For the profit-maximizing firm, price markup is a markup over _______ cost, a
ID: 1246385 • Letter: 1
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1) For the profit-maximizing firm, price markup is a markup over _______ cost, and the markup depends only on _______. a. marginal, elasticity of demand b. average, elasticity of supply c. total, elasticity of fringe supply d. fixed, production elasticity 2) There is an outward shift in the demand curve of a profit-maximizing monopolist, and the monopolist decreases output. What does the monopolist do to price? a. The monopolist decreases price. b.The monopolist leaves price unchanged. c. The monopolist increases price. d. The answer is uncertain, because the monopolist behaves as a price-taker when the demand curve shifts. 3. The payoff matrix for FORM and GM, each of which is determining whether to offer a technical change or a styling change in a new-model product, is as follows (where H>M>L profits, subscript GM refers to GM, subscript F refers to FORD): Technical Change Styling Change FORD Technical Change Hf, Mgm Hf, Lgm FORD Styling Change Lf, Lgm Mf, Hgm Only one of the auto companies has a dominant strategy: which company? And what is its dominant strategy? a. GM, styling change b. GM, technical change c. Ford, styling change d. Ford, technical change Thanks!Explanation / Answer
a. marginal, elasticity of demand c. The monopolist increases price.
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