A Monopoly Is Producing 1000 Units of Output at a Price

question 9

Multiple Choice

A monopoly is producing 1000 units of output at a price of £20. At that level of output, marginal cost is £5 and average cost is £8. The monopoly firm is earning profit equal to _____.

• A) £20 000
• B) £15 000
• C) £7000
• D) £12 000

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Definitions:

Crude Oil

Crude oil is a natural, unrefined petroleum product composed of hydrocarbon deposits and other organic materials, used as a primary energy source and raw material for various products.

Diamonds

Valuable gemstones that are often used in jewelry and have significant industrial applications due to their hardness.

Economies Of Scale

Cost advantages that enterprises gain due to an increase in size or output, resulting in lower costs per unit.

Small Populations

Demographic groups with a relatively small number of individuals, often making them subject to unique economic and statistical considerations.