8. A level of output for a firm at which Marginal Cost had risen to equality with price would (1) be a profit-maximizing output level in both pure (or perfect) competition and imperfect competition; (2) be a profit-maximizing output level in pure (or perfect) competition but not in imperfect competition; (3) not be a profit-maximizing output level either in perfect or in imperfect competition; (4) be a profit-maximizing output level in imperfect competition but not in pure (or perfect) competition; (5) definitely be a profit-maximizing output level in imperfect competition, but might or might not be in pure (or perfect) competition.
9. A firm in conditions of imperfect competition which finds itself at an output level where Marginal Cost has risen to equality with price, and which wants to maximize its profit, ought to (1) increase its output; (2) change (either increase or decrease) its price but not its output; (3) maintain both price and output at their present levels; (4) increase its price; (5) perhaps do any of the above—information furnished is insufficient to tell.
10. The essence of the general rule for maximizing profits given in the text chapter is that a firm should set its price, or its output, as follows: set its (1) price at a level where the excess over the minimum-possible level of Average Cost is at its maximum; (2) output at a level where the extra production cost resulting from the last unit produced just equals the extra revenue brought in by that last unit; (3) price at the highest level which the traffic will bear; (4) price at a level just equal to Marginal Cost (assuming that Marginal Cost would rise with any increase in output); (5) output at a level where Average Cost is at a minimum.
11. A firm would be designated as a monopoly, according to the definition conventionally used by economists, in any situation where (1) the firm's Marginal Revenue exceeds the price it charges at all levels of output (other than the first unit sold); (2) the firm's Marginal Revenue is less than the price it charges at all levels of output (other than the first unit sold); (3) the firm has at least some degree of control over the price that it can charge; (4) the profit earned by the .firm significantly exceeds the competitive rate of return, after proper allowance has been made for risk undertaken; (5) there is no other firm selling a close substitute for the product of this firm.
12. The Marginal Revenue (MR) associated with any given point on a firm's demand curve will be related to the elasticity of demand at that point (with respect to price) as follows:
(1) When demand is inelastic, MR will be negative in value;
(2) when demand is elastic, MR will be negative in value;
(3) when demand is inelastic, MR will be zero in value; (4)
when demand is elastic, MR will be zero in value; (5) .VR of monopoly or imperfect competition. The AR line is Aver-is always positive in value (although below price) regardless age Revenue—in other words, it is price obtainable per unit. of elasticity, except at the point or region of unit elasticity.