A Monopoly Sets a Price of $50 Per Unit for an Item

question 105

Multiple Choice

A monopoly sets a price of $50 per unit for an item that has a marginal cost of $10.Assuming profit maximization,the implicit demand elasticity is

• A) -0.2.
• B) -0.8.
• C) -1.25.
• D) -5.0.

---

Definitions:

Social Insurance

Social insurance is a government or publicly sponsored system that provides financial protection to individuals against economic risks such as unemployment, disability, or old age.

Equality-Efficiency Trade-Off

A concept in economics suggesting that there can be a trade-off between achieving economic equality and efficiency within a society.

Economic Efficiency

A situation in which all resources are allocated in a way that maximizes total benefit or output with minimal waste.

Poverty Rate

The proportion of a population living below the national poverty line, indicating the level of economic deprivation.