1)Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

a. Because the government would not allow such a high price,

b. Because stockholders would not allow such a high price,

c. Because the company would sell so few copies that they would earn higher profits by selling at a lower price,

d. All of the above are correct.

2)For a monopoly, the supply curve is a portion of its:

a. Marginal revenue curve,

b. Marginal cost curve,

c. Average total cost curve,

d. None of the above are correct, a monopoly does not have a supply curve.

1)The correct answer is c. Because the company would sell so few copies that they would earn higher profits by selling at a lower price,

This is because the company keeps the price at lower level to gain a larger market share. If the price of software would be higher, the consumers would be less willing to purchase it and the demand for Microsoft software would be affected. Reducing demand would lead to negatively impact the turnover and profitability of the firm. Meanwhile, at a lower price the demand for software would be higher. As a result, the turnover and the profitability of the firm would increase. With the increasing production level and reducing per unit cost for Microsoft software, other organizations could not compete with it. As a result, Microsoft would be able to gain a larger market share.

2)The correct answer is B marginal cost curve. Moreover, the marginal cost curve represents how the quantity of the produced output relates to the marginal cost, which a firm incurs when it produces short-run goods. Besides, while determining the relationship, all the other variables, i.e., resources price and technology, are kept constant.