A Monopoly Produces Widgets at a Marginal Cost of $10

question 71

Multiple Choice

A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs.It faces an inverse demand function given by P = 50 − Q.Which of the following is the marginal revenue function for the firm?

• A) MR = 60 − 2Q
• B) MR = 50 − Q
• C) MR = 100 − Q
• D) MR = 50 − 2Q

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Definitions:

Put Provision

A clause in a bond or other security that allows the holder to force the issuer to buy back the security before its maturity date.

Call Provision

A clause in a bond contract allowing the issuer to repay the bond before its maturity date under specific conditions.

Convertible Bond

A type of bond that the holder can convert into a specified number of shares of the issuing company, usually at predetermined times during its life.