Suppose a Monopolist Chooses the Price and Production Level That

question 521

Multiple Choice

Suppose a monopolist chooses the price and production level that maximizes its profit. From that point, to increase society's economic welfare, output would need to be increased as long as

• A)average revenue exceeds marginal cost.
• B)average revenue exceeds average total cost.
• C)marginal revenue exceeds marginal cost.
• D)marginal revenue exceeds average total cost.

---

Definitions:

Internal Rate of Return

The discount rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Salvage Value

The projected value an asset will hold for resale when it's no longer useful.

Tax Rate

The share of one's or a company's revenue earmarked for taxation.

Erosion Costs

Erosion Costs are the costs incurred due to the negative impact of introducing a new product or project on the sales and revenue of existing products or projects.