Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12 . How much total profit is the firm earning at this price?
a. $5
b. $25
c. $50
d. $140
c
You might also like to view...
The process of accumulation that occurs when interest is paid on previously earned interest is called:
A. backdating. B. compounding. C. present valuation. D. front loading.
With regard to preventing entry, if identical firms act simultaneously,
A) they cannot credibly threaten each other B) they will all incur losses C) only one firm will enter the market D) none of them would enter the market
What was the most influential factor in the United States' economic development during the 19th century?
A. the abundance of capital B. the abundance of labor C. mass production D. the abundance of land
Answer the following questions true (T) or false (F)
1. If the market for a product begins as perfectly competitive and then becomes a monopoly, there will be a reduction in economic efficiency and a deadweight loss. 2. Suppose a monopoly is producing its profit-maximizing output level. Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output. As a result the monopolist will increase the price of its product to cover its higher cost. 3. Producers in perfect competition receive a smaller producer surplus than a producer in a monopoly.