Suppose a Monopolist's Costs and Revenues Are as Follows: ATC

question 60

Multiple Choice

Suppose a monopolist's costs and revenues are as follows: ATC = $50.00; MC = $35.00; MR = $45.00; P = $55.00. The firm should

• A) increase output and decrease price.
• B) decrease output and increase price.
• C) not change output or price.
• D) shut down.

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Definitions:

Dividend

A portion of a company's earnings that is paid to shareholders, usually on a regular basis.

Nominal Rate

The officially declared or promoted rate of interest for a loan or investment, excluding the effects of compounding or any associated fees.

Loan

A borrowed sum of money that is expected to be paid back with interest.

Investment

Distributing capital or resources with the goal of achieving financial gain or income.