A Monopolist Faces the Following Demand Curve: the Monopolist

question 448

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:

Fixed Costs

Costs that do not change in total despite fluctuations in the volume of goods or services produced or sold.

Variable Costs

Charges that fluctuate according to the degree of business operations.

Cost-volume-profit Graph

A graphical representation that shows the relationship between a company's costs, its sales volume, and its profits, used for planning and decision-making.

CVP Graph

A visual representation of the Cost-Volume-Profit analysis, illustrating the relationship between costs (both variable and fixed), volume of production, and the resulting profit or loss.