A Single-Price Monopolist Is Currently Producing an Output Level Where

question 75

Multiple Choice

A single-price monopolist is currently producing an output level where P = $320,MR = $200,AVC = $327,and MC = $200.In order to maximize profits,this firm should

• A)increase production and reduce prices.
• B)decrease production and increase prices.
• C)not change its output level,because the firm is currently at its profit maximizing level.
• D)produce zero output.
• E)There is insufficient information to make a recommendation.

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Definitions:

February

February is the second month of the year in the Gregorian calendar, known for having 28 days in common years and 29 days in leap years.

May

The fifth month of the year in the Gregorian calendar.

Labor Efficiency Variance

The difference between the actual labor hours used in production and the standard hours expected, multiplied by the standard labor rate.

Labor Rate Variance

The difference between the actual hourly wage paid to workers and the standard or expected wage rate, multiplied by the total hours worked.