Suppose a Monopoly Faces an Inverse Demand Curve of P

question 88

Multiple Choice

Suppose a monopoly faces an inverse demand curve of P = 300 - 10Q and has constant marginal cost of 20. If the government is considering legislation that would regulate price to the competitive level, what is the maximum amount the monopoly would spend on (legal) lobbying activities designed to thwart the regulation?

• A) $280
• B) $1,960
• C) $2,240
• D) None of the statements is correct.

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