Suppose a Monopolist Has Costs Such That When Output Is

question 54

Multiple Choice

Suppose a monopolist has costs such that when output is 1,000 units per hour, average cost is $5. If the monopolist is regulated by a policy of average-cost pricing, the monopolist will charge a price of

• A) $5.
• B) $5 only if the quantity demanded is 1,000 units per hour at a price of $5.
• C) $5 only if the quantity demanded is greater than 1,000 units at a price of $5.
• D) $5 only if the quantity demanded is less than 1,000 units per hour at a price of $5.

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Definitions:

Year 1

Typically refers to the first year of operation for a business or the initial year in a time series analysis in accounting or finance contexts.

Investing Activities

This refers to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Fixed Assets

Long-term tangible assets held for business use and not expected to be converted into cash in the upcoming fiscal year.

Producing Goods

Producing goods involves the processes and activities of manufacturing or creating products from raw materials for sale.