A Single-Price Monopolist Is Currently Producing an Output Level Where

question 75

Multiple Choice

A single-price monopolist is currently producing an output level where P = $320,MR = $200,AVC = $327,and MC = $200.In order to maximize profits,this firm should

• A)increase production and reduce prices.
• B)decrease production and increase prices.
• C)not change its output level,because the firm is currently at its profit maximizing level.
• D)produce zero output.
• E)There is insufficient information to make a recommendation.

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Definitions:

Direct Material Costs

The expenses for raw materials that are directly traceable to the manufacturing of a specific product.

Units Produced

The total number of complete units manufactured or finished in a given period.

Fixed Costs Per Unit

Fixed costs per unit decrease as production volume increases, reflecting the spread of costs that do not change with the level of output over a larger number of units.

Units Produced

The total quantity of goods manufactured by a company within a specific period.