Once a Monopoly Has Determined How Much It Produces, It

question 57

Multiple Choice

Once a monopoly has determined how much it produces, it will charge a price that

• A) is determined by its demand curve.
• B) is equal to its average total cost.
• C) is independent of the amount produced.
• D) is determined by the intersection of the marginal cost and average total cost curves.
• E) minimises marginal cost.

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Definitions:

Straight-Line Depreciation

Depreciation method in which the amount taken to depreciation expense each year is constant and equal to 1/n times the depreciable amount, where n is the depreciable life of the asset.

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Opportunity Cost

The receipts from the next most valuable forgone alternative when making a decision or choice among many options.

Opportunity Cost

The value of the best alternative foregone where a choice needs to be made between several mutually exclusive alternatives.