If a Monopolist's Marginal Revenue Is $35 Per Unit and Its

question 187

Multiple Choice

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then

• A)to maximise profit the firm should increase output.
• B)to maximise profit the firm should decrease output.
• C)to maximise profit the firm should continue to produce the output it is producing.
• D)Not enough information is given to say what the firm should do to maximise profit.

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Definitions:

Deferred Taxes

Taxes that are owed but not yet paid, arising from temporary differences between accounting and tax treatments of income and expenses.

Retrospective Adjustment

A change applied to the accounting records of prior periods to correct an error or implement a change in accounting principle.

Cumulative Effect

The aggregate impact of an accounting change or policy on a company's financial statements over time.

Average Cost

A method for inventory and cost of goods sold valuation, calculated by dividing the total cost by the number of items.