A Profit-Maximizing Monopolist Faces a Demand Function Given by Q

question 18

Multiple Choice

A profit-maximizing monopolist faces a demand function given by q = 1000 - 20p, where p is the price of her output in dollars. She has a constant marginal cost of 20 dollars per unit of output. In an effort to induce her to increase her output, the government agrees to pay her a subsidy of $10 for every unit that she produces. She will

• A) increase her price and lower her output.
• B) decrease her price by $5 per unit.
• C) decrease her price by $10 per unit.
• D) decrease her price by more than $10 per unit but by less than $16 per unit.
• E) decrease her price by more than $16 per unit.

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Definitions:

Vocabulary Words

A set of words known and used by a person, important for communication and understanding in a particular language.

Hermann Ebbinghaus

A German psychologist best known for his pioneering work on memory and learning, including the discovery of the forgetting curve.

Forgetting Occurs

The process where information once learned and stored in the brain is lost or becomes harder to recall over time.

Encoding Failure

A situation in which information does not enter the brain's long-term memory and thus is forgotten.