Producing level of output at which demand is inelastic

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Indicate whether each of the following statements is true or false, and explain/justify your answer.

a. If a monopolist is producing a level of output at which demand is inelastic, the firm is not maximizing profits, and increasing output will decrease total revenue.

b. A monopolistically competitive firm produces a level of output at which price equals $80, marginal revenue equals $40, average total cost equals $100, marginal cost equals $40, and average fixed cost equals $10. To maximize profit, the firm should produce a smaller output and sell it at a higher price.

Reference no: EM13887792

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