The Following Question Are Based on the Following Diagram of a Monopolist

question 22

Multiple Choice

The following question are based on the following diagram of a monopolist:

-If the monopolist is currently producing 0A and wants to maximize profits,it should

• A) do nothing because it is maximizing profits.
• B) decrease output to zero.
• C) raise output to 0B.
• D) raise output to 0C.
• E) raise output above 0C.

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Definitions:

Financial Leverage

The use of borrowed funds to increase the potential return of an investment.

Managers

Individuals in an organization responsible for controlling or administering all or part of a company or similar organization.

Times-Interest-Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its interest expenses to its earnings before interest and taxes (EBIT).

Debt Obligations

These are the amounts of money that a company or individual owes to lenders or creditors, which must be repaid according to agreed-upon terms.