If a Single-Price Monopolist Has to Lower Price to Sell

question 38

Multiple Choice

If a single-price monopolist has to lower price to sell an additional unit of its good, and it charges the same price for all units of its good, it follows that

• A)its demand curve will be its marginal revenue curve.
• B)it will maximize profits by maximizing revenue.
• C)it will sell its good for a price above average total cost.
• D)its demand curve will lie above its marginal revenue curve.

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Definitions:

Predetermined Overhead Rate

A rate used in cost accounting to allocate manufacturing overhead costs to products based on a planned level of activity or driver, such as machine hours or labor hours.

Machine-Hours

A measure of production volume or activity based on the number of hours machines are in operation.

Unused Capacity

The available production capability that is not being utilized by a company.

Capacity

It is the maximum level of output that a company can sustain to produce in a given period under normal conditions.