The market for cell phones is one where the individual firms have monopoly power and a positive amount of economic profit. Based only on this information, which of the following statements is TRUE:

a. The firms in this market are able to charge a price greater than marginal cost.

b. We would expect the firms' output level to indicate economies of scale.

c. If these firms were switch to practicing price discrimination by charging different customers different prices in a profit maximizing manner, instead of setting a single price for their product, then we would expect the total social net benefits in this market to increase.

d. Answers a and c are true.

e. Answers a, b, and c are all true.

 

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