A Monopolist Faces Market Demand Given by P = 100

question 35

Multiple Choice

A monopolist faces market demand given by P = 100 - 3Q.For this market,MR = 100 - 5Q and MC = 25.What price will the monopolist charge in order to maximize profits

• A)$12.50
• B)$25.00
• C)$55.00
• D)$84.50

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Definitions:

Profitability Index

A calculation that compares the present value of all future cash flows of an investment to its initial cost, used to assess its profitability.

Net Present Value (NPV)

The calculation used to find today's value of a future stream of payments and receipts, factoring in the time value of money.

Option to Abandon

A strategic decision-making right allowing a company to cease investment in a project if operational costs outweigh the benefits.

Forecasting Error

The difference between the actual value and the predicted value in forecasting, indicating the accuracy of the prediction.