A Monopolist Faces the Demand Curve Q = 90 -

question 66

Multiple Choice

A monopolist faces the demand curve q = 90 - , where q is the number of units sold and p is the price in dollars. He has quasi-fixed costs, C, and constant marginal costs of $20 per unit of output. Therefore his total costs are C + 20q if q > 0 and 0 if q = 0. What is the largest value of C for which he would be willing to produce positive output?

• A) $3,200
• B) $2,560
• C) $4,800
• D) $20
• E) $3,840

---

Definitions:

Obtaining

The act of acquiring or getting possession of something.

Standard Normal

A normal distribution with a mean of 0 and a standard deviation of 1, used as a basis in statistical analysis for converting scores from any normal distribution.

Random Variable

A variable whose values depend on outcomes of a random phenomenon.

Standard Normal

A Gaussian distribution defined by a zero mean and a one standard deviation.