The Monopolist That Maximizes Profit

question 12

Multiple Choice

The monopolist that maximizes profit:

• A) imposes a cost on society because the selling price is above marginal cost.
• B) imposes a cost on society because the selling price is equal to marginal cost.
• C) does not impose a cost on society because the selling price is above marginal cost.
• D) does not impose a cost on society because price is equal to marginal cost.

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Definitions:

Support Price

A price set by the government or a regulatory body at a certain level to maintain the income of producers and encourage production.

Excess Supplies

A situation where the quantity of a product offered is greater than the quantity demanded at the current price.

Producer Surplus

The difference between the amount producers are willing to supply goods for and the actual amount received from selling those goods.

Government Payments

Financial transfers made by the government to individuals, businesses, or other governments, often as part of welfare, subsidy programs, or for procurement of services and goods.