A Monopolist Has the Total Cost Function C(q)= 750

question 69

Multiple Choice

A monopolist has the total cost function c(q) = 750 + 5q.The inverse demand function is 140 - 7q, 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 will make positive profit but not as much profit as it would make if it were allowed to choose its own price.
• B)the firm's profits will be zero.
• C)the firm will lose $375.
• D)the firm will lose $750.
• E)the firm will lose $450.

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Definitions:

Income Statement

An Income Statement is a financial document that shows a company's revenue, expenses, and profits or losses over a specific period.

Excess Inventory

A situation where a company holds a larger amount of inventory than it can sell or use within a reasonable period, often leading to increased costs.

Tied-up Funds

Money that is currently invested, in use, or otherwise not readily available for free spending or other investment opportunities.

Lost Sales

Potential sales that were not realized due to stock shortages, inadequate service, or other operational issues.