At His Current Level of Output, a Monopolist Has an MR

question 92

Multiple Choice

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve is upward sloping, what can we conclude about the monopolist?

• A) It could increase profit by increasing his price.
• B) It is producing at the profit-maximizing level of output.
• C) It should exit the market if significant fixed costs have been incurred.
• D) It could increase profit by increasing output.

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Definitions:

Overdue Accounts

Financial accounts or receivables that have not been paid by the due date.

Receivables

Amounts owed to a company by its customers for goods or services provided on credit.

Net Float

The difference between checks written against a bank account and those that have been deposited but not yet cleared, affecting the balance.

Chequing Account

A bank account allowing the account holder to withdraw funds, write checks, and use electronic debit to access funds.