A Monopoly Market Is Characterized by the Inverse Demand Curve

question 15

Multiple Choice

A monopoly market is characterized by the inverse demand curve P = 1,200 - 40Q and a constant marginal cost of $200. If the marginal cost of production rises to $400, the profit-maximizing output level _____ units and the price rises by _____.

• A) decreases by 6; $100
• B) decreases by 2.5; $100
• C) increases by 4; $200
• D) decreases by 8; $200

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Definitions:

Carbon Dioxide

A gas that is transparent and lacks smell, created during the burning of organic materials and the process of respiration.

Cell Membrane

The semipermeable membrane surrounding the cytoplasm of a cell, controlling the movement of substances in and out.

Lungs

Organs in the chest involved in the respiratory system where blood exchanges oxygen and carbon dioxide.

Hemoptysis

The coughing up of blood or blood-stained mucus from the lungs or airways, possibly indicating a serious underlying condition.