A Monopolist Is Maximizing Profit at an Output Rate of 1,000

question 66

Multiple Choice

A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue is

• A) $5 per unit, and the monopolist earns zero economic profits.
• B) $6 per unit, and the monopolist earns economic profits of $2,000 per month.
• C) $6 per unit, and the monopolist earns economic losses of $1,000 per month.
• D) $6 per unit, and the monopolist earns economic profits of $3,000 per month.

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Definitions:

Government Policy

The plans and actions taken by a government to achieve particular objectives, which can encompass a wide range of issues including economic, social, and foreign policy.

Environmental Damage

The detrimental impact on nature and the environment, including ecosystems, biodiversity, and human health, caused by human activities.

Semideveloped Countries

Nations that are in a transitional phase between developing and developed status, characterized by improving but not yet fully developed economic, social, and political systems.

Charles Darwin

A 19th-century naturalist and geologist known for his theory of evolution through natural selection.