The Demand Equation for a Good Produced by a Monopolistically

question 21

Multiple Choice

The demand equation for a good produced by a monopolistically competitive firm is P = 10 - Q. If the firm's marginal cost is a constant $2 per unit, what price will it charge and how many units will it produce if it maximizes its profits?

• A) $8 and two units
• B) $7 and three units
• C) $6 and four units
• D) $5 and five units

---

Definitions:

Eligible Dividends

Dividends that are qualified for special tax treatment under certain jurisdictions.

Tax Paid

The amount of money paid to the government as a result of taxable activities, such as income earned or goods sold.

Ending Fixed Assets

The value of a company's physical assets, such as property, buildings, and machinery, at the end of an accounting period.

Cash Flow From Assets

The total of cash flow to bondholders and cash flow to shareholders, consisting of operating cash flow, capital spending, and additions to net working capital.