A Monopoly Produces Widgets at a Marginal Cost of $20

question 64

Multiple Choice

A monopoly produces widgets at a marginal cost of $20 per unit and zero fixed costs.It faces an inverse demand function given by P = 100 − 4Q.What are the profits of the monopoly in equilibrium?

• A) $800
• B) $600
• C) $400
• D) $200

Explain the role of excess capacity in monopolistic competition.

Evaluate the economic efficiency and resource allocation in monopolistically competitive markets.

Understand the impacts of pricing strategies on firm profitability in different market structures.

Understand the definition and characteristics of oligopoly.

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