A Monopolist Has a Marginal Cost of $4 and No

question 23

Multiple Choice

A monopolist has a marginal cost of $4 and no fixed cost.It faces the following inverse demand curve: p = 40 - q.The monopolist can introduce a new packaging for its product.Such new packaging does not alter the marginal cost.It makes the product more attractive for the consumer,and it would lead to a new inverse demand curve p = 40 - 0.5q.What is the maximum amount that the monopolist would be willing to invest in this new packaging project?

• A) $245
• B) $324
• C) $420
• D) It cannot be determined.

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Definitions:

Medical Insurance

This insurance provides coverage for the health care and surgical expenses of the person insured.

Emergency Room

A specialized department in a hospital that provides immediate treatment for acute illnesses and trauma.

Uninsured

Individuals or entities that lack insurance coverage, leaving them financially vulnerable to risks or losses that would otherwise be mitigated by insurance.

Costs

The amount of money required for the production of goods or services, including materials, labor, and overheads.