A Monopolist Finds the Price-Output Combination That Maximizes Its Profits

question 118

Multiple Choice

A monopolist finds the price-output combination that maximizes its profits by

• A) equating total revenue and total cost.
• B) equating marginal revenue and marginal cost.
• C) finding the combination for which the difference between marginal revenue and marginal cost is the greatest.
• D) equating price and marginal cost.

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Definitions:

Real Rate Of Return

The annual percentage of profit earned on an investment, adjusted for changes in the inflation rate.

Shareholders

Individuals or entities that own shares in a corporation, making them partial owners and entitling them to a portion of the company's profits.

Corporate Bond

A type of debt security issued by a corporation to raise capital, promising to pay back the face value, along with interest, to the bondholders.

Primary Market

The market in which financial institutions aid in the sale of new securities.