Suppose That a Monopolist Charges a Uniform Price of $10

question 171

Multiple Choice

Suppose that a monopolist charges a uniform price of $10 based on profit maximization and has a constant marginal cost of $3.Beth is willing to pay $6 for the monopolist's output.Therefore,

• A) the monopolist should lower his price to $6 for all consumers.
• B) the monopolist should ignore Beth's want;he is already maximizing profit.
• C) if resale of the output is impossible,the monopolist should lower his price to $6 just for Beth.
• D) if resale of the output is possible,he should lower his price to $6 just for Beth.
• E) the monopolist will not be better off if he lowers his price to $6 just for Beth.

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Definitions:

Supply Reduction

A decrease in the amount of goods provided in the market, which can result from various factors, including production cuts or supply chain disruptions.

Safety Inventory

Safety inventory refers to a quantity of stock maintained to mitigate the risk of stockouts due to demand and supply variability.

Product Availability

The degree to which products are in stock and accessible to customers, influencing customer satisfaction and sales.

Product Fill Rate

A measure of a company's ability to meet customer demand from available stock, often expressed as a percentage of customer orders fulfilled from stock on hand.