Suppose That for a Monopoly Average Total Cost Is $3

question 42

Multiple Choice

Suppose that for a monopoly average total cost is $3.50, marginal cost is $3.00, and marginal revenue is $3.00 with a selling price of $4.00. To maximize profits, the monopoly should

• A)change neither price nor output.
• B)increase both output and price.
• C)decrease both output and price.
• D)increase output but decrease price.
• E)decrease output but increase price.

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Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and profit or loss over a specific period.

Exchange Rates

The value of one currency for the purpose of conversion to another, used in international trade and investment.

Sales

The transactions involving the exchange of goods or services for money; it represents the total amount of revenue generated by a business.

Accounts Receivable

The amount of money owed to a company for goods or services that have been delivered but not yet paid for.