A Monopolist Sets Both Price and Quantity Simultaneously, and the Amount

question 260

Multiple Choice

A monopolist sets both price and quantity simultaneously, and the amount of output that it supplies depends

• A) only on the marginal cost curve.
• B) only on the demand curve.
• C) on both its marginal cost curve and the demand curve that it faces.
• D) on both its average cost curve and the demand curve that it faces.

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Definitions:

Average Total Cost

The total cost divided by the number of units produced, representing the cost per unit.

Average Variable Cost

The cost per unit of output that varies with the level of production, typically including labor and material costs.

Marginal Cost

The cost added by producing one additional unit of a product or service.

Total Fixed Cost

The total of all expenses that do not vary with the amount of production or output.