1. If a monopolist produces to a point at which marginal revenue is less than marginal cost then
a. profits are being maximized.
b. profits will always be negative.
c. the incremental cost of producing the last unit exceeds the incremental revenue.
d. the incremental cost of producing the last unit is less than the incremental revenue.
2. The conclusion that a monopoly results in lower output and higher prices than perfect competition relies on the assumption that
a. the demand curve for a monopoly is horizontal.
b. consumers are ignorant of the effects of monopoly.
c. the costs of production are the same whether the industry is perfectly competitive or a monopoly.
d. elasticity of demand varies along the market demand curve.