Suppose When a Monopolist Produces 50 Units Its Average Revenue

question 262

Multiple Choice

Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist?

• A)The monopolist is currently maximizing profits, and its total profits are $200.
• B)The monopolist is currently maximizing profits, and its total profits are $250.
• C)The monopolist is not currently maximizing its profits; it should produce more units and charge a lower price to maximize profit.
• D)The monopolist is not currently maximizing its profits; it should produce fewer units and charger a higher price to maximize profit.

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Definitions:

Control Chart

A tool used in process control to monitor, control, and identify the stability of a process over time.

Process

A series of actions or steps taken in order to achieve a particular end.

Statistical Process Control

A method used to monitor, control, and ensure the quality of processes by using statistical methods.

Type II Error

A statistical error that occurs when a hypothesis test fails to reject a false null hypothesis, also known as a "false negative."