The Optimal Price for a Monopolist Facing Different Demand Curves

question 144

Multiple Choice

The optimal price for a monopolist facing different demand curves in two separate markets will be:

• A) higher in the market with more elastic demand.
• B) higher in the market with less elastic demand.
• C) the same in both markets.
• D) equal to marginal cost in each markets.

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Definitions:

Factory Overhead

All costs related to manufacturing that are not direct materials or direct labor expenses.

Cost Allocation

The process by which factory overhead or other costs are assigned to a cost object, such as a job.

Cost Object

A product, sales territory, department, or activity to which costs are assigned, depending on the decision-making needs of management.

Unemployment Compensation

A government program that provides financial assistance to individuals who have lost their jobs through no fault of their own.