Which of the Following Is Not True

question 54

Multiple Choice

Which of the following is not true?

• A)A monopolist typically seeks to maximize profits.
• B)A monopolist can set price at arbitrarily high levels.
• C)Economies of scale are the cause of natural monopolies.
• D)Monopolists price on the elastic portion of their demand curves.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Unit Product Cost

The total cost incurred to produce, market, and distribute a single unit of a product.

Variable Costing

This is an accounting method that only includes variable costs—costs that change with production volume—in the calculation of product cost.

Total Contribution Margin

The difference between total sales revenue and total variable costs, indicating the total earnings available to cover fixed expenses and generate profit.