A Monopolist Has the Total Cost Function C(q) = 750

question 42

Multiple Choice

A monopolist has the total cost function c(q) = 750 + 5q. The inverse demand function is 140 - 7q, where prices and costs are measured in dollars. If the firm is required by law to meet demand at a price equal to its marginal costs,

• A) the firm will make positive profit but not as much profit as it would make if it were allowed to choose its own price.
• B) the firm's profits will be zero.
• C) the firm will lose $375.
• D) the firm will lose $750.
• E) the firm will lose $450.

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