By Adhering to the MC = MR Principle, a Monopoly

question 14

Multiple Choice

By adhering to the MC = MR principle, a monopoly will assure itself:

• A) either maximum profits or minimum losses.
• B) large profits.
• C) economic profits.
• D) no losses.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used to evaluate the profitability of an investment.

Aversion To Ambiguity

A preference to avoid options for which the probability of outcomes is unknown, indicating a dislike for uncertain situations.

Gambler's Fallacy

The mistaken belief that if something happens more frequently than normal during a given period, it will happen less frequently in the future, or vice versa.

False Consensus

The cognitive bias that leads people to overestimate the extent to which their beliefs, values, opinions, or habits are normal and typical of those of others.