If a Monopolist Faces a Constant-Elasticity Demand Curve Given by Q

question 19

Multiple Choice

If a monopolist faces a constant-elasticity demand curve given by Q = 400P ^-2 and has total costs given by TC = 0.625Q²,its profit-maximizing level of output is:

• A) 0.
• B) 2.
• C) 4.
• D) 6.
• E) 8.

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Definitions:

Marginal Cost

The boost in complete costs associated with creating one more unit of a product or service.

Private Good

A product that is excludable and rival in consumption, meaning its use is limited to the purchaser and it cannot be shared without diminishing availability to others.

Rivalry

Competition or contention between two or more parties for a goal that only one can attain.

Excludability

A characteristic of a good according to which it is possible to prevent people who have not paid for the good from consuming it.