Suppose That a Pure Monopolist Can Sell 4 Units of Output

question 27

Multiple Choice

Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit.The monopolist will produce and sell the fifth unit if its marginal cost is

• A)$1 or less.
• B)$.75 or less.
• C)$1.75 or less.
• D)$2 or less.

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Definitions:

Cartel

An alliance of producers who agree to control prices, production, and marketing of their products to maximize collective profits.

Oligopoly Market

A market structure characterized by a small number of firms that dominate the market, often leading to limited competition.

Licensed to Sell

The authorization given to individuals or companies to engage in the selling of certain products or services.

Antitrust Lawsuit

A legal action taken against parties alleged to have violated antitrust laws, aimed at promoting competition and preventing monopolies.