A Profit-Maximizing Monopolist Will Maximize Both Total Revenue and Economic

question 58

Multiple Choice

A profit-maximizing monopolist will maximize both total revenue and economic profit at the same price when _____,given that there are no fixed costs.

• A)the marginal cost curve is upward-sloping
• B)demand is perfectly inelastic
• C)marginal cost is zero
• D)marginal revenue is an increasing function of quantity produced

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Definitions:

Contribution Margin

The sum of money left over after variable costs are subtracted, which is available to pay for fixed costs and add to profit.

Incremental Manufacturing Cost

The additional cost associated with producing one more unit of a product.

Direct Materials

Raw materials that are directly traceable and a major component of a finished product.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, depreciation, and factory supplies, that are not directly traceable to a product.