Suppose a Monopolist Charges a Uniform Price of $10 Based

question 70

Multiple Choice

Suppose a monopolist charges a uniform price of $10 based on profit maximization and has constant marginal costs of $3.Cody is willing to pay $6 for the monopolist's output.Therefore:

• A)the monopolist should lower its price to $6 for all consumers.
• B)the monopolist should ignore Cody's want;it is already profit maximizing.
• C)if resale of the output is impossible,the monopolist should lower its price to $6 just for Cody.
• D)the monopolist will not be better off if it lowers its price to $6 just for Cody.

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Definitions:

Direct Labor Hours

The total hours worked by employees that can be directly associated with the production of goods or services.

Single Plantwide Overhead Rate

A cost allocation method that applies the same overhead rate to all products, regardless of the department where they were produced or the amount of overhead they actually incurred.

Machine Hours

A metric used to allocate manufacturing overhead costs to individual products based on the number of hours the machines are run to produce them.

Fabrication Department

A division or unit within a manufacturing firm dedicated to the assembly or production of goods, where raw materials are transformed into finished products.