Consider a Monopolist Attempting to Engage in Limit Pricing with Total

question 30

Multiple Choice

Consider a monopolist attempting to engage in limit pricing with total costs C(Q) = 100 + 2Q.The market (inverse) demand for its product is P = 100 − 2Q.Currently,the monopolist produces 30 units of output.Assuming the potential entrant has the same cost structure as the incumbent monopolist,is it profitable for the entrant to produce 10 units of output?

• A) Yes, since the market price of $20 is greater than the average total cost of producing 10 units.
• B) No, since the market price of $20 is less than the average total cost of producing 10 units.
• C) Yes, since the market price of $50 is greater than the average total cost of producing 10 units.
• D) No, since the market price of $50 is less than the average total cost of producing 10 units.

---

Definitions:

Functional Structure

An organizational design that groups together people who are doing similar jobs, use similar skills, or provide similar services within an organization.

Divisional Structure

An organizational framework where the company is divided into semi-autonomous units, each responsible for a particular business aspect or geographical area.

Customer Segments

Groups of potential consumers classified by specific characteristics like demographics, behaviors, or needs, helping businesses to target their products or services more effectively.

Network Structures

Arrangements or patterns of nodes (which can be people, organizations, or devices) connected by lines or links, often used to describe social, business, or communication networks.