Suppose When a Monopolist Produces 75 Units Its Average Revenue

question 486

Multiple Choice

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

• A)The monopolist is currently maximizing profits, and its total profits are $375.
• B)The monopolist is currently maximizing profits, and its total profits are $300.
• C)The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits.
• D)The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.

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Definitions:

Loan Term

The duration of time over which a loan agreement is in effect, and by the end of which the loan should be repaid.

Compounded Annually

Occurs when interest is added to the principal sum of an investment or loan once per year, resulting in interest on interest.

Compounded Annually

Interest calculation method where interest is added to the principal once a year, leading to an exponential increase.

Compounded Semiannually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, done twice a year.