One Way a Monopoly Can Convert Additional Consumer Surplus into Economic

question 59

Multiple Choice

One way a monopoly can convert additional consumer surplus into economic profit is to

• A) lower prices.
• B) raise prices.
• C) price discriminate.
• D) become more competitive.
• E) produce where price equals average total cost.

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profit or losses.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

Fair Value Enterprise Method

A valuation approach that estimates the value of an entire enterprise based on the fair value of its assets and liabilities.

Equity Method

An accounting technique used by companies to record their investments in other companies, based on the equity or ownership stake in those companies.