Which of the Following Statements Is Correct for a Monopolist

question 45

Multiple Choice

Which of the following statements is correct for a monopolist? i) The firm maximizes profits by equating marginal revenue with marginal cost.
Ii) The firm maximizes profits by equating price with marginal cost.
Iii) Demand equals marginal revenue.
Iv) Average revenue equals price.

• A) i), iii), and iv) only
• B) i) and iv) only
• C) i), ii), and iv) only
• D) i), ii), iii), and iv)

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Definitions:

Put Option

A financial contract giving the option buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time frame.

At the Money

A term used in options trading to describe a situation where the market price of the underlying asset is equal to the strike price of the option.

Conversion Value

The value of a convertible security if it were converted into a different security, typically shares of the issuing company's stock.

Convertible Bond

A bond that allows the holder to exchange it for a specific number of the issuer's stock shares at chosen times throughout its duration, typically at the holder's option.