If a Monopoly Firm Sells to Competitive Distributors and the Distributors

question 21

Multiple Choice

If a monopoly firm sells to competitive distributors and the distributors have a constant marginal cost of $5 and they are paying the profit- maximizing wholesale price of $10, what is the retail price of the product?

• A)$15
• B)$5
• C)$10
• D)$7

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Definitions:

Telephone Bill

A monthly statement charging an individual or company for the use of telephone services.

Expense

An outflow of cash or other valuable assets that a business incurs as a result of its operations intended to generate revenue.

Liability

Financial obligations or debts that a company owes, which are settled over time through the transfer of economic benefits including money, goods, or services.

Trial Balance

A report that lists all the balances of the general ledger accounts to check the correctness of bookkeeping entries.