Table 81 A Monopoly Producer of Foreign Language Translation Software Faces a |

question 111

Multiple Choice

Table 8.1
$$\begin{array} { | c | c | c | } \hline \text { Price per Unit } & \begin{array} { c } \text { Quantity Demanded } \\\text { (units) }\end{array} & \begin{array} { c } \text { Total Cost of } \\\text { Production } \\\text { (dollars) }\end{array} \\\hline \$ 85 & 10 & \$ 530 \\\hline 80 & 11 & 540 \\\hline 75 & 12 & 550 \\\hline 70 & 13 & 560 \\\hline 65 & 14 & 575 \\\hline 60 & 15 & 595 \\\hline 55 & 16 & 625 \\\hline\end{array}$$ A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 8.1.
-Refer to Table 8.1.What is the firm's profit-maximising output and what is the price charged to sell this output?

• A) P = $85; Q = 10
• B) P = $80; Q = 11
• C) P = $70; Q = 13
• D) P = $65; Q = 14

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Definitions:

Demand Equation

A mathematical representation of the relationship between the quantity of a good consumers are willing and able to buy and the good's price.

Supply Equation

An economic formula that represents the relationship between the quantity of a good supplied by producers and the price of the good.

Price Floor

A minimum price set by the government for certain goods and services, intended to prevent prices from dropping too low.

Shortage/Surplus

A situation in the market where the amount of a product that consumers want to buy is greater than the amount available (resulting in a shortage), or the available amount is more than what consumers want to purchase (leading to a surplus).