A Natural Monopolist Has the Total Cost Function C(q)= 350

question 2

Multiple Choice

A natural monopolist has the total cost function c(q) = 350 + 20q, where q is its output.The inverse demand function for the monopolist's product is p = 100 - 2q.Government regulations require this firm to produce a positive amount and to set price equal to average costs.To comply with these requirements

• A)is impossible for this firm.
• B)the firm must produce 40 units.
• C)the firm could produce either 5 units or 35 units.
• D)the firm must charge a price of $70.
• E)the firm must produce 20 units.

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Definitions:

Price of Ingredients

The cost of raw materials used in the production of goods, which can impact the final price of the product and profitability of producers.

Cattle Feed

A type of food specifically formulated and provided for the dietary needs of cattle, including grains, hay, and other nutrients.

Supply Curve for Milk

A graphical representation showing the relationship between the quantity of milk that producers are willing to sell and the price of milk.

Price of Milk

The amount of money required to purchase a specific quantity of milk, which can vary due to factors like supply and demand, production costs, and market conditions.