Q1. Explain why each of the following statements are false. For each, write the correct statement.

a. A monopolist maximizes profits when MC=P

b. The higher the price elasticity, the higher is a monopolist's price above its MC.

c. Monopolists ignore the marginal principle.

d. Monopolists will maximize sales. They will therefore produce more than perfect competitors and their price will be lower.

Q2. Advertising is powerfull strategy to make people know/aware about company products and services and for this case is to emphasize reliability and low price, this effort will help the company to sustain in this area and to develop a customer franchise and brand loyalty . At the end high relative market share can be able able to reduce costs because of economies of scale.