The Student Room Group

Edexcel A2 Economics Unit 3 2012

Hi All,

On the Edexcel A2 Economics Unit 3 I always get stuck with the output/price/profit questions, for example:


January 2010 Paper Q5

A profit maximising monopolist facing constant average costs experiences a decrease in demand. Other things being equal, which of the following is likely to happen?

Output Price Profit

A stays constant falls falls
B rises rises stays constant
C stays constant rises falls
D falls rises falls
E falls falls falls

The answer is E however I thought it was D as the firm has monopoly power it can raise the price due to the inelsatic demand to recover some of the fall in profit.

If anyone can give me any general advice on this type of question I would be extremely appreciative

Many thanks

Quick Reply

Latest