Suppose That a Private Monopolist Is Supplying a Good That

question 115

Multiple Choice

Suppose that a private monopolist is supplying a good that is nonrival but excludable to a market with demand of P = 24 - 3Q.If the marginal cost of providing this good is zero but the firm charges $18,the monopolist will provide ______ units and the efficient output is __________ units.

• A)2;8
• B)6;8
• C)2;2
• D)4;2

Know how to use the Profitability Index (PI) to rank investment projects under capital constraints.

Understand the concepts and differences between mutually exclusive and independent projects.

Gain knowledge on capital budgeting decisions and the factors influencing these decisions.

Understand the concept of discounted cash flow valuation and its relevance to investment appraisal.

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Definitions:

Du Pont Identity

A formula that breaks down the return on equity into three parts: profit margin, asset turnover, and financial leverage, to analyze a company's financial performance.

GAAP

Stands for Generally Accepted Accounting Principles, which are a common set of accounting standards and procedures used in the U.S.

Asset Management Ratios

Financial metrics used to evaluate a company's efficiency in managing its assets to generate sales or revenue.

Common Size Statements

Financial statements that present all items in percentage terms; percentage of total assets for balance sheets and percentage of sales for income statements.