A Natural Monopolist Has the Total Cost Function C(q)= 350

question 2

Multiple Choice

A natural monopolist has the total cost function c(q) = 350 + 20q, where q is its output.The inverse demand function for the monopolist's product is p = 100 - 2q.Government regulations require this firm to produce a positive amount and to set price equal to average costs.To comply with these requirements

• A)is impossible for this firm.
• B)the firm must produce 40 units.
• C)the firm could produce either 5 units or 35 units.
• D)the firm must charge a price of $70.
• E)the firm must produce 20 units.

---

Definitions:

Policy Price

The price set by government policy, often used in the context of agricultural products or utilities.

Government Policy

A plan of action or a set of decisions made by a government to guide public actions in a specific field or achieve certain goals.

Price Range

The spread between the highest and lowest selling price of a good or service in a particular market over a given period.

Government Payment

Funds disbursed by the government to individuals, businesses, or other government bodies, often as part of a policy or program.