A Monopolist with a Marginal Cost of MC = 20Q

question 66

Multiple Choice

A monopolist with a marginal cost of MC = 20Q faces the inverse demand curve P = 90 - 5Q. The profit-maximizing price is $_____.

• A) 80
• B) 75
• C) 70
• D) 65

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Definitions:

Expected Loss

The anticipated amount of loss a party might suffer in an investment or venture, taking into account the likelihood of various outcomes.

Probability

The likelihood of a particular event happening.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because another party bears the consequences or costs.

Taxi Driver

An individual who operates a car for hire to transport passengers as a profession.