The Monopolist Will Choose the Price and Output Combination at Which

question 282

Multiple Choice

The monopolist will choose the price and output combination at which

• A) MC equals AR.
• B) MC equals MR.
• C) MC equals price.
• D) MR equals AR.

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Definitions:

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Game Theory

The study of behavior in situations of interdependence. Used to explain the behavior of an oligopoly.

Dominant Strategies

In game theory, strategies that are best for a player, regardless of the strategies chosen by other players.

Payoff Matrix

In game theory, a diagram that shows how the payoffs to each of the participants in a two-player game depend on the actions of both; a tool in analyzing interdependence.