Scenario: Tobac Co

question 135

Multiple Choice

Scenario: Tobac Co. is a monopolist in the cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. The fixed cost of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) demand curve is P = 8 - 0.04Q, where Q is the quantity demanded (in millions of packs) and P is the price per pack (in $) . Also, you should draw in the marginal revenue curve.

-Refer to the scenario above.By how much does Tobac Co.'s revenue go up (or down) when its quantity sold goes up from 50 million to 100 million packs of cigarettes?

• A) $100 million
• B) $50 million
• C) $25 million
• D) $12.5 million

---

Definitions:

Supervision

The act of overseeing and guiding employees or subordinates in their duties to ensure quality and efficiency.

Client Relationships

The interactions and bonds formed between a business and its clients, crucial for long-term success and customer satisfaction.

Combining Tasks

The process of merging separate tasks or duties into a single, more complex job role to enhance job satisfaction and productivity.

Motivating Potential

The degree to which a job or task has characteristics that can stimulate job satisfaction and intrinsic motivation in employees.