To maximize profit, a pure monopolist must:
A. maximize its total revenue.
B. maximize the difference between marginal revenue and marginal cost.
C. maximize the difference between total revenue and total cost.
D. produce where average total cost is at a minimum.
Answer: C
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Jacko's rock band is putting out a new CD with its music label. The contract between the band and the label specifies that the band receive 25% of the gross revenues plus another $10,000 up front
The record label projects the demand for the album p = 50 - 0.003Q where p is the price per CD (in $) and Q is the number of CDs demanded. The cost (not including the band's salary) of producing the CD is constant at $5 per disc. a. Compute the joint-profit-maximizing price and quantity. b. Compute the profit maximizing price that the label will wish to set. c. What price will Jacko want his band's CD sold for? (Assume he only cares about money earned from the CDs.)
When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect
a. True b. False Indicate whether the statement is true or false