A Risk Neutral Monopoly Must Set Output Before It Knows

question 15

Multiple Choice

A risk neutral monopoly must set output before it knows for sure the market price.There is a 50% chance the firm's demand curve will be P = 20 - Q and a 50% chance it will be P = 40 - Q.The marginal cost of the firm is MC = Q.What is the expression for the expected marginal revenue function?

• A)E(MR) = 20 - 2Q.
• B)E(MR) = 30 - 2Q.
• C)E(MR) = 40 - 2Q.
• D)E(MR) = 50 - 2Q.

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Definitions:

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, encouraging the subject to associate certain behaviors with certain consequences.

Repertoires

The range or collection of skills, abilities, or behaviors that an individual possesses or can perform.

Operant Conditioning

A method of learning that employs rewards and punishments to influence behavior.