A Monopoly Produces Widgets at a Marginal Cost of $10

question 85

Multiple Choice

A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs.It faces an inverse demand function given by P = 50 − Q.Suppose fixed costs rise to $400.What happens in the market?

• A) The firm will raise the price.
• B) The firm will shut down immediately.
• C) The firm continues to produce the same output and charge the same price.
• D) The firm will reduce its output and raise price.

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Definitions:

Direct Sales Promotions

Strategies and tactics implemented by companies to sell their products or services directly to consumers, bypassing intermediaries.

Sales Objectives

Specific goals set by a business related to the selling of products or services, often quantifiable and set within a timeframe.

Evaluating Performance

Involves systematically assessing the work and results of individuals or organizations to determine achievement or progress.

Product Modifications

Changes or improvements made to a product to enhance its performance, appearance, or market appeal.