Suppose the Table Below Describes the Relationship Between Price and Quantity

question 37

Multiple Choice

Suppose the table below describes the relationship between price and quantity demanded for a monopolist. $$\begin{array} { | c | c | } \hline \text { Quantity } & \text { Price } \\\hline 1 & \$ 10 \\\hline 2 & \$ 9 \\\hline 3 & \$ 8 \\\hline 4 & \$ 7 \\\hline 5 & \$ 6 \\\hline 6 & \$ 5 \\\hline 7 & \$ 4 \\\hline 8 & \$ 3 \\\hline\end{array}$$ If the marginal cost of producing each unit of output is $5, then this monopolist's profit-maximizing level of output is ______.

• A)5
• B)4
• C)3
• D)2

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Definitions:

Purchase Allowance

Purchase allowance is a reduction in the purchase price, granted by the seller to the buyer, often due to defects in goods or discrepancies in the order.

Sales Discount

A reduction from the listed price of goods or services, offered by sellers to buyers under specific conditions.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for certain other costs such as salaries, administrative expenses, and taxes.

Credit Terms

The conditions under which credit will be extended to a customer, including the repayment time frame and any applicable interest or discounts for early payment.