If the Inverse Demand Curve a Monopoly Faces Is P

question 91

Multiple Choice

If the inverse demand curve a monopoly faces is p = 100 - 2Q,and MC is constant at 16,then the firm's Lerner Index equals

• A) 58/16.
• B) 16/42.
• C) 58/42.
• D) 42/58.

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Definitions:

Average Total Cost

The total cost of production divided by the quantity of output produced, including both fixed and variable costs.

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, and loan payments.

Marginal Cost

The monetary outlay for producing an additional unit of a good or service.

Fixed Costs

Expenses that do not change in the short term regardless of the level of production or sales, such as rent and salaries.