You Are the Manager of a Monopoly That Faces a Demand

question 47

Multiple Choice

You are the manager of a monopoly that faces a demand curve described by P = 80 − 5Q.Your costs are C = 10 + 5Q.The revenue-maximizing output is:

• A) 2.5.
• B) 5.
• C) 8.
• D) None of the preceding answers is correct.

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Definitions:

Transfer Price

Transfer price is the price at which goods and services are transferred between departments or subsidiaries of the same company.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.

Supplying Division

The department or unit within a company that is responsible for providing the materials, products, or services to other divisions or departments within the same company.

Transfer Price Approach

A method used for pricing transactions between affiliated companies or divisions within the same larger corporate entity.