The Profit-Maximizing Output of a Pure Monopoly Is Not Socially

question 21

Multiple Choice

The profit-maximizing output of a pure monopoly is not socially optimal, because in equilibrium

• A) price equals minimum average total cost.
• B) marginal revenue equals marginal cost.
• C) marginal cost exceeds price.
• D) price exceeds marginal cost.

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Definitions:

Cash Revenues

Income generated from transactions that involve the immediate receipt of cash from customers.

Cash Account

An account that records cash transactions including receipts, disbursements, and balances held in cash form by an entity.

Owner's Capital

The total equity of an owner in a company, representing the net assets belonging to the owner.

Prepaid Insurance

Payments made for insurance policies in advance; these are recorded as an asset until the coverage period elapses, at which point they become an expense.