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:

Unearned Revenue

Income received by a business for goods or services yet to be provided, recorded as a liability on the balance sheet.

Fees Earned

Revenue generated from services provided or work completed.

Net Income

The net income of a company, which is derived by deducting all costs, taxes, and losses from the overall revenue.

Net Loss

The result of a company’s expenses exceeding its revenues during a specific period, indicating a negative financial performance.