Suppose That a Monopolist Calculates That at Its Present Output

question 55

Multiple Choice

Suppose that a monopolist calculates that at its present output level, marginal revenue is $4.50 and marginal cost is $2.75. It could maximize profits or minimize losses by

• A)increasing price and decreasing output.
• B)decreasing price and increasing output.
• C)decreasing price and leaving output unchanged.
• D)decreasing output and leaving price unchanged.

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Definitions:

Work in Process

Inventory items that are in the production process but are not yet completed goods, often abbreviated as WIP.

Factory Overhead

Indirect costs related to manufacturing, including utilities, depreciation of equipment, and salaries of supervisors.

Finished Goods

Goods that are fully manufactured and prepared for sale to consumers.

Cost of Goods Sold

The total direct costs attributable to the production of goods sold in a company.