Suppose When a Monopolist Produces 75 Units Its Average Revenue

question 486

Multiple Choice

Suppose when a monopolist produces 75 units its average revenue is $10 per unit, its marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its average total cost is $5 per unit. What can we conclude about this monopolist?

• A)The monopolist is currently maximizing profits, and its total profits are $375.
• B)The monopolist is currently maximizing profits, and its total profits are $300.
• C)The monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profits.
• D)The monopolist is not currently maximizing profits; it should produce fewer units and charge a higher price to maximize profits.

---

Definitions:

Production Control

The activity of planning, coordinating, and controlling the manufacture process from raw materials to finished product delivery.

Form Utility

The value added to goods through a change in form, shape, or appearance, to make them more useful or appealing.

Raw Materials

Basic substances in their natural, modified, or semi-processed states, used as inputs to a production process for manufacturing finished goods.

Quality Control

A process through which a business seeks to ensure that product quality is maintained or improved and manufacturing errors are reduced or eliminated.