Suppose a Monopolist Knows the Own Price Elasticity of Demand

question 140

Multiple Choice

Suppose a monopolist knows the own price elasticity of demand for its product is −3 and that its marginal cost of production is constant MC(Q) = 10.To maximize its profit,the monopoly price is:

• A) $1.50 per unit.
• B) $6.67 per unit
• C) $10 per unit.
• D) $15 per unit.

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Definitions:

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's financial condition at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income.

Accrual

The accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Expense

An expense represents a cost incurred by a business or individual in the process of generating revenue.