The Demand for a Monopolist's Output Is 7,000 Divided by the Square

question 6

Multiple Choice

The demand for a monopolist's output is 7,000 divided by the square of the price in dollars that it charges per unit.The firm has constant marginal costs equal to 1 dollar per unit.To maximize its profits, it should charge a price of

• A)1 dollar.
• B)2 dollars.
• C)3 dollars.
• D)1.5 dollars.
• E)2.5 dollars.

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Definitions:

Stored Goods

Items that are kept in a warehouse or other storage location for future use, sale, or distribution.

Stolen Article

An item that has been taken without permission, leading to the loss of ownership or possession by the rightful owner.

Fair Market Price

The price of a good or service that is agreed upon by both buyer and seller, under conditions where both have reasonable knowledge of the pertinent facts and neither is under compulsion to transact.

Financial Loss

The decrease in monetary value resulting from an event, transaction, or series of transactions.