Bob Owns a Trout Farm with Monopoly Power in North

question 15

Multiple Choice

Bob owns a trout farm with monopoly power in North Carolina. Bob's optimal output occurs where marginal revenue _____. Because of monopoly power, Bob's supply curve _____.

• A) equals marginal cost; does not exist
• B) exceeds marginal cost; does not exist
• C) equals marginal cost; is upward-sloping
• D) exceeds marginal cost; is perfectly inelastic

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Definitions:

Monopolistic

Pertaining to a market structure where there is only one producer or seller for a product or service, limiting competition.

Marginal Revenue

The extra income a company earns by selling an additional unit of a product or service.

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service; it varies depending on the level of production.

Average Variable Cost

The total variable costs divided by the quantity of output produced, representing the average cost of producing each unit excluding fixed costs.