A Monopolist Faces the Inverse Demand Function Described by P

question 3

Multiple Choice

A monopolist faces the inverse demand function described by p = 23 - 5q, where q is output.The monopolist has no fixed cost and his marginal cost is $6 at all levels of output.Which of the following expresses the monopolist's profits as a function of his output?

• A)23 - 5q - 6
• B)17q - 5q²
• C)23 - 10q
• D)23q - 5q² - 6
• E)None of the above.

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Definitions:

Mechanism Design

A field in economics and game theory that seeks to design rules or incentives for a system to achieve a desired objective, considering individuals' private information and incentives.

Welfare Policy

A governmental strategy designed to support the wellbeing of citizens, often through financial aid, healthcare, and education.

Health Insurance

A type of insurance that covers the whole or part of the risk of a person incurring medical expenses, spreading the risk over numerous individuals.

Adverse Selection

A situation in which sellers have information that buyers do not have, or vice versa, leading to an inefficient market outcome.