If a Monopolist Produces Output in More Than One Plant

question 40

Multiple Choice

If a monopolist produces output in more than one plant, output should be distributed among those plants so that:

• A) the total costs of production are the same in each plant
• B) the marginal revenue of producing the last unit of output in each plant is the same for all plants
• C) the average total cost of producing the last unit of output in each plant is the same for all plants
• D) the average revenue of producing the last unit of output in each plant is the same for all plants

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, reflecting the economic benefit to consumers.

Perfectly Competitive Industry

An industry characterized by many small firms, identical products sold by all firms, no barriers to entry or exit, and perfect information among consumers and producers.

AC

Short for Air Conditioning, a system for controlling the humidity, ventilation, and temperature in a building or vehicle.

Price Effect

The impact on consumer behavior and purchase decisions resulting from a change in the price of a good or service.