Consider a Monopolist Attempting to Engage in Limit Pricing with Total

question 44

Multiple Choice

Consider a monopolist attempting to engage in limit pricing with total costs, C(Q) = 100 + 2Q.The market (inverse) demand for its product is P = 100 - 2Q.Currently, monopolist produces 30 units of output.Assuming the potential entrant has the same cost structure as the incumbent monopolist, is it profitable for the entrant to produce 10 units of output?

• A)Yes, since the market price of $20 is greater than the average total cost of producing 10 units.
• B)No, since the market price of $20 is less than the average total cost of producing 10 units.
• C)Yes, since the market price of $50 is greater than the average total cost of producing 10 units.
• D)No, since the market price of $50 is less than the average total cost of producing 10 units.

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Definitions:

Flexibility

The capacity to adjust one’s behavior or thinking to suit changes in the environment or situation.

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A work schedule that allows employees to work their required hours over fewer days in a week, often resulting in longer work days but additional days off.

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Working from a remote location outside of a traditional office environment, often from home, leveraging technology to stay connected and complete tasks.