A Profit-Maximizing Monopolist Is Selling 20,000 Units of Output at $1,400

question 71

Multiple Choice

A profit-maximizing monopolist is selling 20,000 units of output at $1,400 per unit. The marginal cost of production is constant at $600. What happens if marginal cost rises to $680?

• A) The monopolist will increase the price by less than $80 and sell fewer than 20,000 units of output.
• B) The monopolist will increase the price to $1,480 and sell 20,000 units of output.
• C) Because the monopolist is already maximizing profit, the increase in marginal cost will have no effect on the price or quantity produced.
• D) The monopolist will keep the price unchanged but sell more than 20,000 units of output to make up for higher costs of production.

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Definitions:

Brand Loyalty

The tendency of consumers to continuously purchase one brand's products over competing ones due to their trust and satisfaction.

Social Marketing

The application of marketing principles to a social issue to bring about attitudinal and behavioral change among the general public or a specific population segment.

Self-actualization

The actualization of one's abilities and potential, seen as an innate motivation or requirement in every person.

Brand-loyal

Refers to consumers who consistently purchase the same brand over alternatives due to preference, satisfaction, or perceived value.