If a Monopoly Firm Sells to Competitive Distributors and the Distributors

question 2

Multiple Choice

If a monopoly firm sells to competitive distributors and the distributors have a constant marginal cost of $8 and they are paying the profit- maximizing wholesale price of $20, what is the retail price of the product?

• A)$8
• B)$28
• C)$12
• D)$20

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Definitions:

Economic Means

The methods or tools employed to allocate and utilize resources efficiently in the production, distribution, and consumption of goods and services.

Rational Allocate

The process of distributing resources or effort in a way that maximizes the achievement of objectives, based on logical reasoning.

Normative Statement

Statements that express opinions, values, or prescriptions for how the world should be, rather than stating facts.

Value Judgments

Evaluations based on individual or societal beliefs about what is good, desirable, or worthwhile, often influenced by personal ethics or morals.