A Monopolist Faces a Constant Marginal Cost of $1 Per

question 29

Multiple Choice

A monopolist faces a constant marginal cost of $1 per unit and has no fixed costs.If the price elasticity of demand for this product is constant and equal to -3, then

• A)to maximize profits, he should charge a price of $1.50.
• B)to maximize profits, he should charge a price of $3.
• C)to maximize profits, he should charge a price of $1.33.
• D)he is not maximizing profits.
• E)None of the above.

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Definitions:

Line L

Represents the relationship between the quantity of labor hired and the amount of output produced, often used in economics to illustrate productivity.

Income Received

The total amount of money received by an individual or entity during a specified time frame, from all sources.

Highest Quintile

Refers to the top 20 percent of the population or distribution in terms of income, wealth, or other measurable attributes.

Income Received

The total amount of money or its equivalent received by an individual or organization before taxes and deductions.