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:

Par Value Bond

A bond that is selling for its original face value, as opposed to above (a premium) or below (a discount).

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, indicating the price change in percentage terms for a yield move of one percent.

Macaulay Duration

A measure of the weighted average time until a bond's cash flows are paid back, used to assess interest rate risk.