Suppose a Monopolist Faces the Demand Curve Shown Below

question 109

Multiple Choice

Suppose a monopolist faces the demand curve shown below. The monopolist maximizes its profits by:

• A)charging $70 for each unit.
• B)producing 35 units, since this is where total revenue is maximized.
• C)producing the level of output at which marginal revenue minus marginal cost is greatest.
• D)producing the level of output at which marginal revenue equals marginal cost.

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Definitions:

Net Income

The profit amount a company achieves after all its expenses and taxes have been subtracted from its revenue stream.

Owner's Equity

The residual interest in the assets of a company after deducting liabilities, representing the owners' share.

Liabilities

Economic obligations or debts that an entity owes to external parties, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Assets

Properties or items owned by an organization or a person, which have value and can offer future advantages.