Answer to Question #52955 in Microeconomics for Yana

Question

TRUE/FALSE
1. In a natural monopoly, the long - run average cost curve declines and therefore average cost is lower when there is only one seller.
2. A natural monopoly maximizes profits at the point at which price equals minimum average total cost.
3. A monopoly earns the most profit by charging a price where demand is inelastic.
4. When a monopoly price discriminates, it charges the highest price to the group of buyers with the least elastic demand.

Answer 1

TRUE/FALSE
1. In a natural monopoly, the long - run average cost curve declines and
therefore average cost is lower when there is only one seller - false.
2. A natural monopoly maximizes profits at the point at which price equals minimum average total cost - false.
3. A monopoly earns the most profit by charging a price where demand is inelastic - true.
4. When a monopoly price discriminates, it charges the highest price to
the group of buyers with the least elastic demand - true.