A Monopolist Faces the Following Demand Curve

question 403

Multiple Choice

A monopolist faces the following demand curve:

The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit.If the monopolist were able to perfectly price discriminate,how many units would it sell?

• A) 400
• B) 500
• C) 900
• D) 4,200

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Definitions:

Tax

A mandatory financial charge imposed by a governmental organization on individuals or entities to fund public expenditures.

Slightly Inelastic

A situation where a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Demand for Product

The total amount of a product or service that consumers are willing and able to purchase at various price levels, at a given time.

Advertisers

companies or individuals who pay to promote their products or services, typically through various media channels.