Suppose a Monopolist Must Choose Between Two Points on Its

question 19

Multiple Choice

Suppose a monopolist must choose between two points on its demand curve.It can either sell 100 units for $3 each or sell 140 units for $2 each.Which of the following is true?

• A)The demand for the monopolist's product is price elastic for the given range of output.
• B)The demand for the monopolist's product is unit elastic for the given range of output.
• C)The demand for the monopolist's product is price inelastic for the given range of output.
• D)The monopolist is facing a horizontal supply curve.
• E)The monopolist is facing an upward-rising demand curve.

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Definitions:

Target Return-on-investment Pricing

A pricing strategy aiming to set prices based on the expected return on investment (ROI) that is targeted by the company.

Annual Target ROI

The specific return on investment a company aims to achieve within one fiscal year.

Target Return-on-investment Pricing

A pricing method aimed at achieving a specific return on investment by setting prices based on the required rate of return.

Automobile Manufacturer

A company engaged in the design, production, marketing, and selling of motor vehicles.