A Monopolist Faces the Following Demand Curve

question 71

Multiple Choice

A monopolist faces the following demand curve:
The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

• A)400
• B)500
• C)900
• D)4,200

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Definitions:

Sale Price

The amount of money for which a product, asset, or service is sold in the marketplace.

Revaluation Model

An accounting method allowing for the increase or decrease of an asset's value on the balance sheet, based on current fair values.

Fair Value

The price at which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction.

Gain on Sale

The financial profit gained from selling an asset for more than its book value.