1 Which of the following statements is TRUE?

A monopoly can charge whatever it wants.

A monopoly cannot set price and quantity such that the point lies above the demand curve.Profit maximization occurs by setting price first.

Both A and B.

2 If a monopoly can advertise and as a result the demand curve will become more inelastic, the monopoly

Should engage in the advertising until the demand curve becomes more elastic.

Should always engage in the advertising.

Will earn higher gross profit if it advertises.

None of the above.

3.A monopolist that chooses price

produces more than a monopolist that chooses quantity, thus the irony of laws against price fixing.

necessarily produces less than a monopolist that chooses quantity, hence the laws against price fixing.

produces the same amount as a monopolist that chooses quantity.

can set price higher than the demand curve and earn additional profits, whereas a firm that chooses quantity cannot.

4.A monopolist that chooses price

produces more than a monopolist that chooses quantity, thus the irony of laws against price fixing.

necessarily produces less than a monopolist that chooses quantity, hence the laws against price fixing.

produces the same amount as a monopolist that chooses quantity.

can set price higher than the demand curve and earn additional profits, whereas a firm that chooses quantity cannot.