Roach Motors Has a Monopoly on Used Cars in Enigma

question 29

Multiple Choice

Roach Motors has a monopoly on used cars in Enigma, Ohio.By installing secret microphones in the showroom, the friendly salespersons at Roach are able to learn each customer's willingness to pay and can therefore practice first-degree price discrimination, extracting from each customer his entire consumer's surplus.The inverse demand function for cars in Enigma is P = 2,000 - 10Q.Roach Motors purchases its stock of used cars at an auction in Cleveland for $500 each.Roach motors will

• A)sell 75 cars for a total profit of $56,250.
• B)sell 150 cars at a price of $300 a car.
• C)sell 150 cars for a total profit of $112,500.
• D)sell 180 cars and make a total profit of $180,000.
• E)shut down since revenue will not cover variable costs.

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Definitions:

Liable

Being legally responsible or accountable, usually in the context of paying damages or fulfilling obligations.

Transferable Interest

The aspect of an owner's interest in a business that can be transferred or sold to another party.

Creditor

An entity or person to whom money is owed by a debtor or borrower.

Efficient Manager

An individual who is effective at organizing resources and processes to achieve specific goals with minimum waste.