A Monopolist Is Maximizing Profit at an Output Rate of 1,000

question 66

Multiple Choice

A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue is

• A) $5 per unit, and the monopolist earns zero economic profits.
• B) $6 per unit, and the monopolist earns economic profits of $2,000 per month.
• C) $6 per unit, and the monopolist earns economic losses of $1,000 per month.
• D) $6 per unit, and the monopolist earns economic profits of $3,000 per month.

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Definitions:

Adrenal Glands

Endocrine glands located above the kidneys that produce hormones such as adrenaline and cortisol, involved in stress responses.

Pancreas

A glandular organ in the digestive system and endocrine system which secretes digestive enzymes and hormones such as insulin.

Posterior Pituitary

An extension of the brain located at the base of the skull responsible for the secretion of hormones like oxytocin and vasopressin.

Metanephros

Most caudally located of the three excretory organs appearing during embryonic development; becomes the permanent kidney of mammals. In mammalian embryos, it is formed caudal to the mesonephros and develops later as the mesonephros undergoes regression.