Consider a Profit-Maximizing Monopoly Pricing Under the Following Conditions

question 309

Multiple Choice

Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

• A)$40
• B)$100
• C)$200
• D)$400

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Definitions:

Operant Conditioning

A learning process in which the consequences of a behavior influence the likelihood of that behavior being repeated.

Classical Conditioning

The method of learning by forming associations between a stimulus found in the environment and one that occurs intrinsically.

Law of Effect

A psychological principle stating that behaviors followed by positive outcomes are likely to be repeated, while those followed by negative outcomes are not.

Thorndike

Refers to Edward L. Thorndike, an American psychologist famous for his work on learning theory that led to the development of operant conditioning within behaviorism.