Suppose a Firm's Inverse Demand Curve Is P = 150

question 153

Multiple Choice

Suppose a firm's inverse demand curve is P = 150 - 5Q, its Lerner index is 0.875 at the profit-maximizing quantity, and its marginal cost is constant at $10. The profit-maximizing price is $____.

• A) 90
• B) 80
• C) 70
• D) 60

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Definitions:

Stock Dividend

A payment made in the form of additional shares rather than cash, distributed to shareholders from the company's existing stock.

Cash Dividends Payable

A liability account on a company’s balance sheet representing the amount of dividends declared by the board of directors but not yet paid out to shareholders.

General Journal Entry

A basic accounting record used to log all business transactions and events in the accounting system.

Cash Dividends

Payments made to shareholders out of a company's earnings, representing a share of the profits.