Suppose We Know That a Monopolist Is Maximising Its Profits

question 45

Multiple Choice

Suppose we know that a monopolist is maximising its profits. Which of the following is a correct inference? The monopolist has:

• A) maximised the difference between marginal revenue and marginal cost
• B) maximised its total revenue
• C) equated marginal revenue and marginal cost
• D) set price equal to its average cost

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Definitions:

Asset Accounts

Accounts on a balance sheet that represent the resources owned by a company, which have value and can provide future benefits.

Common Stock

Equity ownership in a corporation, entitling holders to vote at shareholder meetings and to receive dividends.

T-account

A visual representation used in accounting to depict the debit and credit sides of an account.

Debits

Financial transactions representing increases in assets or expenses or decreases in liabilities, equity, and income.