A Monopolist Has the Total Cost Function C(q)= 800 +8q

question 18

Multiple Choice

A monopolist has the total cost function c(q) = 800 +8q.The inverse demand function is 80 - 6q, where prices and costs are measured in dollars.If the firm is required by law to meet demand at a price equal to its marginal costs,

• A)the firm's profits will be zero.
• B)the firm will lose $400.
• C)the firm will make positive profit but not as much profit as it would make if it were allowed to choose its own price.
• D)the firm will lose $800.
• E)the firm will lose $480.

Understand the principles of tax design, including the trade-offs between efficiency and equity.

Recognize the importance and implications of government expenditure on public goods and services.

Evaluate the impact of taxes on consumer choices and market outcomes.

Understand the role of taxes in addressing externalities and funding public services.

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Definitions:

Treasury Stock

Treasury stock consists of shares that were issued and later reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Bonds Payable

Long-term debt instruments issued by a company to raise capital, with the promise to pay back with interest at a future date.

Direct Method

A cash flow statement formulation approach that lists major classes of gross cash receipts and payments.

Cash Received

The total amount of money received by a company during a specific period, including revenues, investments, and other sources of income.