(Scenario: a Monopolist) a Monopolist Faces a Demand Curve Given

question 50

Multiple Choice

(Scenario: A Monopolist) A monopolist faces a demand curve given by P = 20 - Q and has total costs given by TC = Q². By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 2Q. Now suppose that the country in which this monopolist is located decides to engage in international trade. The world price of the product produced by the monopolist is $12. The profit-maximizing output level is 6, and the profit-maximizing price equals $12. What are its monopoly profits at this price and quantity?

• A) $25
• B) $36
• C) $50
• D) $75

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Definitions:

Binge Drinkers

Individuals who consume a large amount of alcohol in a short period, typically defined as five or more drinks for men, and four or more for women, in about two hours.

Ethnic Group

A community or population made up of people who share a common cultural background or descent.

Binge Drinking

The consumption of an excessive amount of alcohol in a short period, leading to acute intoxication.

18th Amendment

An addition to the United States Constitution that prohibited the manufacture, sale, or transportation of alcoholic beverages, later repealed by the 21st Amendment.