Suppose Marginal Cost Is Constant and Equal to 100 and Market

question 76

Multiple Choice

Suppose marginal cost is constant and equal to 100 and market demand is given by Q_d = 20- 1/10P. A profit-maximizing monopolist will set price equal to:

• A) 10.
• B) 100.
• C) 150.
• D) 300.

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Definitions:

Cost Of Goods Sold

The total cost directly associated with producing goods sold by a business, including materials and labor.

Perpetual Inventory System

An inventory system under which the company keeps detailed records of the cost of each inventory purchase and sale, and the records continuously show the inventory that should be on hand.

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold, thus expenses are based on the oldest costs.

Latest Goods On Hand

Refers to the most recent inventory of products or materials that a company has available for use or sale.