Bob's Butcher Shop Is the Only Place Within 100 Miles

question 436

Multiple Choice

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

• A)The price of Bob's bison burgers will be less than Bob's marginal cost.
• B)The price of Bob's bison burgers will exceed Bob's marginal cost.
• C)The price of Bob's bison burgers will equal Bob's marginal cost.
• D)Costs are irrelevant to Bob because he is a monopolist.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a specific price level, at a given point in time.

Elasticity Coefficient

A numeric value that measures the responsiveness of the quantity demanded or supplied of a good to a change in one of its determinants, such as price.

Perfectly Inelastic

A situation where the demand for a product does not change in response to changes in price; the demand curve is perfectly vertical.

Gas-guzzler Automobiles

Describes vehicles that are inefficient in their fuel consumption, typically with lower miles per gallon.