A Monopoly Produces Widgets at a Marginal Cost of $10

question 85

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.Suppose fixed costs rise to $400.What happens in the market?

• A) The firm will raise the price.
• B) The firm will shut down immediately.
• C) The firm continues to produce the same output and charge the same price.
• D) The firm will reduce its output and raise price.

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Definitions:

Delay Time

A specific duration used to postpone an event or action in a system.

Retentive Timer

An electromechanical relay that accumulates time whenever the device receives power and maintains the current time should power be removed from the device. Loss of power to the device after reaching its preset value does not affect the state of the contacts.

Off-Delay Nonretentive Timer

A timing function that starts counting when its input is turned off and does not retain the timing value after the power is removed.

Time Delay

Time Delay refers to a deliberate pause introduced into a control system or circuit to delay the activation or deactivation of an operation or signal.