The Monopolist Determines the Price and Quantity Combination That Maximizes

question 29

Multiple Choice

The monopolist determines the price and quantity combination that maximizes short-run profits by

• A) finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.
• B) determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.
• C) finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.
• D) finding the quantity at which average revenue and average total cost are furthest apart.

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Definitions:

Arousal Theory

A theory in psychology that suggests there is an optimal level of arousal for each individual that leads to the best performance on tasks; too little or too much arousal can decrease performance.

Equipotentiality Theory

The concept that various parts of the brain can take over the functions of other parts if those parts are damaged.

Effortful Processing

A type of information processing that requires a significant amount of attention and conscious effort in order to encode information into memory.

Automatic Processing

The unconscious encoding of incidental information such as space, time, and frequency, and of well-learned information.